Opinion
No. CV 06-5001946 S
March 24, 2009
MEMORANDUM OF DECISION RE MOTION TO STRIKE (MOTION #126.00)
FACTS
On March 29, 2006, the plaintiffs, Randolph Carford and Vidalina Carford, filed a five-count complaint against the defendant, Empire Fire and Marine Insurance Company. The action arises out of a partially outstanding judgment from a lawsuit, where the underlying claim arose from a motor vehicle accident of August 11, 2002. The operative complaint is the revised complaint filed on May 30, 2008. In count one, brought pursuant to General Statutes § 38a-321, the plaintiffs allege that as a result of the defendant's breaches of duty, the defendant is liable to the plaintiffs in the full amount of the judgment, together with prejudgment and postjudgment interest. In count two, the plaintiffs allege that they have suffered substantial additional economic and noneconomic damages and incurred severe and personal hardship by reason of the defendant's failure to effectuate a prompt settlement. In count three, the plaintiffs allege that the defendant engaged in unfair acts and settlement practices in violation of the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a-815 et seq., and the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110b et seq. In count four, the plaintiff alleges that the CUTPA violations were willful, wanton and reckless, and claims "punitive and exemplary damages and attorneys fees." Finally, in count five, the plaintiffs allege that the defendant's reckless and willful conduct in refusing to effectuate a prompt settlement within the limits of the insurance policy caused the plaintiffs extreme mental and emotional distress.
On July 14, 2008, the defendant filed a motion to strike counts two, three, four, and five and the corresponding prayers for relief of the second revised complaint. In response, the plaintiffs submitted a memorandum in opposition dated December 17, 2008. In addition, the plaintiffs submitted a supplemental memorandum on December 30, 2008. The matter was heard at short calendar on January 5, 2009.
DISCUSSION
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "A motion to strike challenges the legal sufficiency of a pleading . . . and, consequently, requires no factual findings by the trial court." (Internal quotation marks omitted.) Batte-Holmgren v. Commissioner of Public Health, 281 Conn. 277, 294, 914 A.2d 996 (2007). The role of the trial court in ruling on a motion to strike is "to examine the [complaint], construed in favor of the [plaintiff], to determine whether the [pleading party has] stated a legally sufficient cause of action," (Internal quotation marks omitted.) Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378, 698 A.2d 859 (1997). "In ruling on a motion to strike, the court is limited to the facts alleged in the complaint." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Batte-Holmgren v. Commissioner of Public Health, supra, 294. "Moreover . . . [w]hat is necessarily implied [in an allegation] need not be expressly alleged." (Internal quotation marks omitted.) Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006).
Counts two and five — Damages pursuant to § 38a-321
The defendant argues that the second and fifth counts, for additional economic and noneconomic damages suffered by the plaintiffs as a result of the defendant's refusal to effectuate a prompt settlement, and for the reckless and willful infliction of emotional distress and mental suffering, respectively, are impermissible causes of action under § 38a-321. Specifically, the defendant asserts that these claims for the plaintiffs' own emotional distress and damages are precluded by § 38a-321, as they could not have been brought by the insured nor do they arise out of the contract of insurance that the insured had with the defendant. In response, the plaintiffs argue that the second and fifth counts are legally sufficient claims for common-law damages resulting from the bad faith conduct of the defendant and the reckless behavior of the defendant respectively. Moreover, the plaintiffs argue that their claim for punitive damages in the fifth count is also legally sufficient in accordance with the count as pleaded.
"General Statutes § 38a-321 provides in relevant part: Each insurance company which issues a policy to any person, firm or corporation, insuring against loss or damage on account of the bodily injury or death by accident of any person, or damage to the property of any person, for which loss or damage such person, firm or corporation is legally responsible, shall, whenever a loss occurs under such policy, become absolutely liable, and the payment of such loss shall not depend upon the satisfaction by the assured of a final judgment against him for loss, damage or death occasioned by such casualty . . . Upon the recovery of a final judgment against any person, firm or corporation by any person, including administrators or executors, for loss or damage on account of bodily injury or death or damage to property, if the defendant in such action was insured against such loss or damage at the time when the right of action arose and if such judgment is not satisfied within thirty days after the date when it was rendered, such judgment creditor shall be subrogated to all the rights of the defendant and shall have a right of action against the insurer to the same extent that the defendant in such action could have enforced his claim against such insurer had such defendant paid such judgment. (Emphasis added; internal quotation marks omitted.) See also Home Ins. Co. v. Aetna Life Casualty Co., 235 Conn. 185, 198, 663 A.2d 1001 (1995) (statute intended to give judgment creditor same rights under policy as insured)." Clinch v. Generali-US. Branch, 110 Conn.App. 29, 32 n. 1, 954 A.2d 223, cert. granted, 289 Conn. 942, 959 A.2d 1006 (2008).
With respect to the allegation of additional damages claimed as a result of the defendant's breach of duty in count two, "our authority recognizes a common-law duty of good faith and fair dealing between an insurer and its insured . . . That duty, however, does not extend to a third party." Carford v. Empire Fire Marine Ins. Co., 94 Conn.App. 41, 46, 891 A.2d 55 (2006); see also Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 642, 804 A.2d 180 (2002) (holding that in context of settling claims, no duty exists between insurer and third party claimant because "such a duty would interfere with the insurer's ability to act primarily for the benefit of its insured").
In the present case, and as previously noted, the plaintiffs argue in their opposition to the motion to strike that the common-law damages are appropriate as resulting from the bad faith conduct of the defendant. However, the duty of good faith and fair dealing does not extend to third parties; absent a contractual relationship between the insurer and the plaintiff, which is not alleged here, a plaintiff may only enforce rights that may be subrogated under § 38a-321 from the insured. As the claimed breach of the duty of good faith and fair dealing did not result in damages suffered by the insured, but rather are damages claimed solely by the plaintiffs, this allegation is outside of the parameters of § 38a-321, and there are no independent allegations in count two giving rise to a separate contractual relationship between the defendant insurer and the plaintiff.
With respect to the allegations of extreme emotional distress in count five, the Connecticut Supreme Court has held that "[i]n order for the plaintiff to prevail in a case for liability under . . . [intentional infliction of emotional distress], four elements must be established. It must be shown (1) that the actor intended to inflict emotional distress or that he knew or should have known that emotional distress was the likely result of his conduct; (2) that the conduct was extreme and outrageous; (3) that the defendant's conduct was the cause of the plaintiff's distress; and (4) that the emotional distress sustained by the plaintiff was severe." (Internal quotation marks omitted.) Carrol v. Allstate Ins. Co., 262 Conn. 433, 443, 815 A.2d 119 (2003).
"Liability for intentional infliction of emotional distress requires conduct exceeding all bounds usually tolerated by decent society, of a nature which is especially calculated to cause, and does cause, mental distress of a very serious kind . . . [I]t is the intent to cause injury that is the gravemen of the tort . . . As this court recently noted, [i]n assessing a claim for intentional infliction of emotional distress, the court performs a gatekeeping function. In this capacity, the role of the court is to determine whether the allegations of a complaint . . . set forth behaviors that a reasonable fact finder could find to be extreme or outrageous. In exercising this responsibility, the court is not fact finding, but rather it is making an assessment whether, as a matter of law, the alleged behavior fits the criteria required to establish a claim premised on intentional infliction of emotional distress." (Citation omitted; internal quotation marks omitted.) Davis v. Davis, 112 Conn.App. 56, 66, 962 A.2d 140 (2009).
Specifically, in the context of insurance cases, the court in Carrol v. Allstate Ins. Co., supra, 262 Conn. 433, held that "the evidence was not sufficient for a jury reasonably to conclude that the defendant's conduct in its fire investigation was extreme and outrageous. The plaintiff produced evidence that the defendant did not conduct a thorough or reasoned investigation and may have decided too quickly that the fire had been set deliberately. As distressing as this insurance investigation may have been to the plaintiff, however, it simply was not so atrocious as to trigger liability for intentional infliction of emotional distress." (Emphasis in original.) Id., 443-44.
In the present case, the plaintiffs do not specify whether they are pleading negligent or intentional infliction of emotional distress in count five. The plaintiffs do allege, however, that the defendant acted willfully and with knowledge that its behavior would harm the plaintiffs, and the allegation sounds more akin to intentional, rather than negligent, infliction of emotional distress. The allegations do not rise to the level of intentional infliction of emotional distress, as the plaintiffs fail to allege that the conduct was extreme and outrageous. Furthermore, the plaintiffs fail to allege behavior "exceeding all bounds usually tolerated by decent society" and, therefore, intentional infliction of emotional distress is insufficiently alleged.
Accordingly, the motion to strike counts two and five is granted.
Counts three and four — CUIPA/CUTPA and CUTPA
The defendant argues that in count three, a claim for violations of CUIPA brought pursuant to CUTPA, the plaintiffs fail to allege that the defendant refused and delayed the prompt settlement of claims with such frequency as to constitute a general business practice, as required under CUIPA. The defendant further argues that in count four, the plaintiffs fail to allege a legally sufficient claim for a CUTPA violation, because the plaintiffs have not set forth (1) a viable CUIPA claim as required to sustain a CUTPA claim for insurance-related conduct or (2) facts sufficient to satisfy any prong of the "cigarette rule." Finally, the defendant alleges that the statement in demand corresponding to the third and fourth counts for punitive and exemplary damages and attorneys fees should also be stricken.
In response, the plaintiffs maintain that their factual allegations in the third count, which they refer to as a "hybrid CUIPA/CUTPA action," are legally sufficient to state a cause of action for unfair insurance practices as permitted by CUTPA. Specifically, the plaintiffs note that they allege that the defendant conducted its claims settlement practices improperly with respect to their claims and to claims by others. The plaintiffs further argue that in count four, they have incorporated by reference from count three the allegations regarding a viable CUIPA claim, as a prerequisite to sustaining their CUTPA claim to allege a legally sufficient CUTPA claim for improper trade practices and for punitive damages. As to their statement in demand corresponding to the third and fourth counts, they contend that their request for damages is legally sufficient.
The Connecticut Supreme Court in Mead v. Burns, 199 Conn. 651, 663, 509 A.2d 11 (1986), held that a "private cause of action [exists] under CUTPA to enforce alleged CUIPA violations." Id.; see also H L Chevrolet, Inc. v. Berkley Ins. Co., 110 Conn.App. 428, 441 n. 7, 955 A.2d 565 (2008) (noting that "[i]n [ Mead v. Burns, supra, 199 Conn. 663], the court held that insurance practices are the subject of two regulatory acts, CUIPA and CUTPA, and that a private cause of action exists under CUTPA to enforce CUIPA violations"); see also Newton Associates, Inc. v. Labrasca, Superior Court, judicial district of Hartford, Docket No. CV 03 0828720 (February 4, 2004, Rittenband, J.T.R.) (granting motion to dismiss CUTPA count and holding "[i]t is well-settled law in Connecticut that in a CUTPA claim against an insurance company, the plaintiff must allege and prove the CUIPA claim in order to establish a CUTPA claim").
With regard to the standard of proof of a CUTPA claim, the Connecticut Supreme Court has stated that "a CUTPA claim based on an alleged unfair claim settlement practice prohibited by § 38a-816(6) require[s] proof, as under CUIPA, that the unfair settlement practice had been committed or performed by the defendant with such frequency as to indicate a general business practice." (Internal quotation marks omitted.) Lees v. Middlesex Ins. Co., 229 Conn. 842, 850, 643 A.2d 1282 (1994). "The term general business practice is not defined in the statute, so we may look to the common understanding of the words as expressed in a dictionary . . . General is defined as prevalent, usual [or] widespread . . . and practice means [p]erformance or application habitually engaged in . . . [or] repeated or customary action." (Citations omitted; emphasis added; internal quotation marks omitted.) Id., 849 n. 8.
"In requiring proof that the insurer has engaged in unfair claim settlement practices with such frequency as to indicate a general business practice, the legislature has manifested a clear intent to exempt from coverage under CUIPA isolated instances of insurer misconduct." (Internal quotation marks omitted.) Lees v. Middlesex Ins. Co., supra, 229 Conn. 849 (1994). Therefore, "claims of unfair settlement practices under CUIPA require a showing of more than a single act of insurance misconduct." Mead v. Burns, supra, 199 Conn. 659. Alleging "improper conduct in the handling of a single insurance claim, without any evidence of misconduct by the defendant in the processing of any other claim, does not rise to the level of a general business practice." Lees v. Middlesex Ins., Co., supra, 229 Conn. 849.
In the present case, the plaintiffs allege in count three that the defendant has committed the acts alleged "with such frequency as to constitute a general business practice in that it repeatedly over several months for various and different reasons refused and delayed the prompt effectuation of settlement of the plaintiffs' claim within the liability policy limits of the commercial auto liability policy insuring the insureds and that this negotiating technique was commonly carried out in order to effectuate settlements with claimants for sums less than what is fair and reasonable under the factual circumstances." The defendant argues that the plaintiffs fail to allege multiple instances of misconduct on multiple claims, as repeated misconduct against only the plaintiffs, even if true as alleged, is insufficient to constitute a general business practice. In response, the plaintiffs maintain that they allege that "this negotiating technique was commonly carried out in order to effectuate settlements with claimants." Thus, it is the plaintiffs' position that they allege misconduct as to multiple claims, not merely their own.
There are numerous trial court decisions addressing the issue. Supporting the plaintiffs' position of denying the motion to strike the CUIPA claim is the case of Colonial Restaurant Supply, LLC v. Travelers Indemnity Co. of America, Superior Court, judicial district of New Haven, Docket No. CV 07 5009224 (June 12, 2007, Skolnick, J.T.R.). In Colonial Restaurant, the court denied the motion to strike, where the complaint alleged that "[t]he defendant's conduct . . . rises to the level of a general business practice in that, other insureds have made claims that the defendant has engaged in similar conduct in the handling of its insurance claims and/or the defendant has been previously found to have violated statutes prohibiting unfair and deceptive trade practices, for its failure to pay the full extent of an insured's loss pursuant to a commercial business insurance policy." The court rejected the defendant's argument that the plaintiff should have identified the other insureds and allege the circumstances surrounding their claims, finding that the defendant had been given sufficient notice of the plaintiffs claims.
Similarly, the court in Levin v. Fireman's Fund Ins. Co., Superior Court, complex litigation docket at Waterbury, Docket No. X06 CV 01 0170962 (July 7, 2003, McWeeny, J.), denied the defendants' motion to strike, deeming similar allegations to be sufficient, where "[t]he complaint allege[d] that [the plaintiff] purchased the policy in issue pursuant to representations made to all members of [an organization of which the plaintiff was a member], that the purchase of the policy would protect him and his general contractor from third-party actions for work-related injuries, that the defendants failed to adopt and implement reasonable standards for obtaining voluntary elections or waivers from prospective claimants, thereby exposing [the plaintiff] to a civil action by [his employee], that the defendants failed to adopt and implement reasonable standards for the prompt investigation of insurance claims, and that some or all of these practices have been committed with such frequency as to constitute a general business practice." (Emphasis added).
Finally, in Zimny v. Aetna Casualty Surety Co., Superior Court, judicial district of Hartford, Docket No. CV 86 0322369 (October 5, 1987, Noren, J.), the court denied the motion to strike, holding that the plaintiff had pleaded that the defendant had violated the appropriate provisions of CUIPA. The court reasoned: "The plaintiff alleges that [the defendant] has committed or performed such acts with such frequency as to indicate a general business practice. The plaintiff further alleges that [the defendant's] particular conduct with regard to the defense of the wrongful death suit including settlement negotiations, was unfair and in violation of [CUTPA]." But see,Currie v. Aetna Casualty Surety Co., Superior Court, judicial district of Hartford, Docket No. CV 96 0558900 (August 12, 1999, Mulcahy J.), (granting the motion to strike the plaintiffs CUIPA/CUTPA claim, holding that "the mere inclusion of the phrase `have continued to commit the acts referred to above as to the plaintiffs . . . and as to other insureds and policy holders of the defendants . . . as to constitute a general business practice in violation of [General Statutes] § 38a-816(6) is . . . in my view, insufficient since it is entirely conclusory and provides no factual basis for a necessary element of the CUIPA claim."); Ciarleglio v. Fireman's Fund Ins. Co., Superior Court, judicial district of Fairfield, Docket No. CV 90 0276028 (December 16, 1993, Fuller, J.), (granting motion to strike, holding that "the bald statement that the defendant has, as a matter of business policy, failed to settle workers' compensation claims of other persons is a legal conclusion, particularly since the other claimants are not identified.") (Citation omitted); Wiacek v. Safeco Ins. Co. of America, Superior Court, judicial district of Danbury, Docket No. 97 0329601 (March 31, 1998, Radcliffe, J.) (granting motion to strike "[b]ecause a general business practice was not alleged regarding all subparagraphs of paragraph 22, only subparagraph c, and the qualifying phrase `upon information and belief' does not constitute an express allegation of a general business practice . . .").
In the present case, the plaintiffs allege in paragraph forty-three of the third count that "The defendant has committed the acts described in the preceding paragraphs with such frequency as to constitute a general business practice in that it repeatedly over several months for various and different reasons refused and delayed the prompt effectuation of settlement of the plaintiff's claim within the liability policy limits of the commercial auto liability policy insuring the insureds and that CT Page 5520 this negotiating technique was commonly carried out in order to effectuate settlements with claimants for sums less than what is fair and reasonable under the factual circumstances." (Emphasis added.)
Viewing the allegations of the complaint in the light most favorable to the plaintiff, for the purposes of a motion to strike, this court finds that the plaintiff has sufficiently pled that the defendant engaged in unfair settlement practice with such frequency as to indicate a general business practice. As such, the defendant's motion to strike counts three and four is denied.
CONCLUSION
For the foregoing reasons the defendant's motion to strike is granted as to counts two and five, and denied as to counts three and four.