ACMAT Corp. v. Greater New York Mutual Insurance Co., 282 Conn. 576

Summary

The Supreme Court of Connecticut considered whether to adopt a common-law exception to the American rule permitting a prevailing policyholder to recover attorney's fees in a declaratory judgment action against its insurer absent bad faith. The court declined to recognize a broad insurance exception and held that fees may be awarded without a contractual or statutory authorization only when the insurer engaged in bad-faith conduct before or during the litigation. Because the trial court found no bad faith and identified no statutory or contractual basis for the award, the judgment was reversed and the case remanded with direction to deny the fee motion.

Holdings

1. Connecticut will not adopt a broad common-law exception to the American rule for prevailing policyholders in insurance coverage declaratory judgment actions. Attorney's fees may be awarded only when authorized by contract or statute, or when the insurer engaged in bad-faith conduct prior to or during the litigation.
2. The trial court improperly awarded ACMAT attorney's fees because no statutory or contractual provision authorized the award and the trial court found that ACMAT failed to prove bad faith.

Questions Presented

1. Whether Connecticut should adopt a common-law insurance exception to the American rule permitting a policyholder that prevails against its insurer in a declaratory judgment action to recover attorney's fees absent insurer bad faith.
2. Whether the trial court improperly awarded attorney's fees where there was no statutory or contractual authorization and no finding of bad faith.

Disposition

reversed_and_remanded