Balboa Ins. Co. v. Zaleski

In Balboa Ins. Co. v. Zaleski, 12 Conn. App. 529, 532 A.2d 973, 977 (Ct.), certif. denied, 206 Conn. 802, 535 A.2d 1315 (1987), the defendant was a contractor who had individually executed a general indemnity agreement in favor of the plaintiff. Id. at 974. The plaintiff, as surety, had issued a performance bond and a labor and material bond to the town of Chester with respect to the defendant's construction of a school roof. Ibid. On September 21, 1979, in a letter to the defendant and the surety, the town alleged that the defendant had abandoned the project and declared that it was terminating the contract. Ibid. One of the defendant's suppliers thereafter brought suit against the surety for payment under the bond and was awarded judgment on October 27, 1981. Ibid. The surety then commenced suit against the defendant on the indemnity agreement, serving the complaint on October 2, 1985. Id. at 974-75. The defendant argued that the limitations period had begun to run on September 21, 1979, when the plaintiff received notice of the defendant's default. Id. at 975. The plaintiff asserted that it had begun on October 27, 1981, when it incurred its first loss. As in this case, a six-year limitations period applied to the action. Id. at 974. The terms of the parties' agreement indemnified the plaintiff against liability as well as loss. Id. at 977. The court found that the plaintiff's cause of action "arose at once upon its becoming liable on the contractor's bond." Ibid. The court held: The immediate right to bring suit against the defendant accrued to the plaintiff upon the defendant's default of its roof replacement contract with the town of Chester. Under the provisions of [the] general indemnity agreement, and under the rule of law concerning a contract which indemnifies against liability as well as loss, the plaintiff's cause of action accrued upon the defendant's default in the underlying performance and labor and material payment bonds. This is so notwithstanding the fact that the plaintiff had not yet suffered a determined or fixed loss. [Ibid.]