Recall Total Information Management, Inc. v. Federal Ins. Co.
115 A.3d 458
Conn.2015Background
- Recall contracted with IBM to store/transport tapes containing employees’ personal data; Recall subcontracted transportation to Ex Log.
- Federal issued a commercial general liability policy to Ex Log (naming Recall as additional insured); Scottsdale issued an umbrella policy with similar personal injury language.
- Ex Log lost computer tapes when they fell from its truck and were recovered by an unknown person; no evidence anyone accessed the data or that any IBM employee suffered an injury.
- IBM incurred and sought reimbursement for identity‑theft remediation expenses from Recall/Ex Log in informal settlement negotiations; insurers were notified but declined to participate or provide coverage.
- Plaintiffs sued the insurers for breach of contract, alleging the loss constituted a covered "personal injury" (privacy violation) and that insurers waived coverage defenses by failing to defend settlement talks; trial court granted insurers’ summary judgment, affirmed by the Appellate Court.
- The Supreme Court granted certification limited to whether the Appellate Court properly affirmed the summary judgment and affirmed the Appellate Court opinion, adopting its reasoning (but disavowing one incidental misstated appellate‑review standard).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insurers waived coverage defenses by failing to defend plaintiffs in settlement negotiations | Insurers breached a duty to defend by refusing to participate in settlement talks, thereby waiving coverage defenses | Policies imposed a duty to defend only for a formal "[s]uit" or "other dispute resolution proceeding," not informal settlement negotiations | No waiver—no duty to defend arose because informal settlement talks were not a covered "suit" or dispute‑resolution proceeding |
| Whether loss of tapes constituted a covered "personal injury" (publication/violation of privacy) | The loss of tapes amounted to a publication of private information and thus a privacy right violation under the policy’s personal injury definition | No publication occurred and no privacy invasion was shown (no access to or dissemination of data), so the loss is not a covered personal injury | Not a covered personal injury—there was no publication or demonstrated violation of privacy rights |
| Proper standard of appellate review of summary judgment | (not asserted as a contested legal issue in this appeal) | Appellate Court had misstated a burdensome standard in recitation | Supreme Court disavowed the Appellate Court’s incorrect description of the appellate standard (clarified review is plenary) but noted the Appellate Court actually applied the correct standard |
Key Cases Cited
- Recall Total Information Management, Inc. v. Federal Ins. Co., 147 Conn. App. 450 (Conn. App. 2014) (Appellate Court opinion affirming trial court’s summary judgment on duty‑to‑defend and coverage issues)
- Norse Systems, Inc. v. Tingley Systems, Inc., 49 Conn. App. 582 (Conn. App. 1998) (precedent cited for appellate review language)
- Citizens Against Overhead Power Line Construction v. Connecticut Siting Council, 311 Conn. 259 (Conn. 2014) (adopted Appellate Court opinion as statement of applicable law)