Opinion
FBTCV176061443S
10-02-2017
Family Garage, Inc. v. Liberty Mutual Fire Insurance Company
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO STRIKE, NO. 112
Anthony D. Truglia, Jr., J.
Facts and Procedural History
Family Garage, Inc. (the plaintiff) has filed a three-count complaint against Liberty Mutual Fire Insurance Company (the defendant). Count one alleges breach of contract; count two claims damages for breach of the covenant of good faith and fair dealing; and count three claims damages for violations of the Connecticut Unfair Insurance Practices Act (CUIPA) and the Connecticut Unfair Trade Practices Act (CUTPA).
In count one of its complaint, the plaintiff alleges the following facts. On September 1, 2015, the plaintiff was the owner of a 2011 Hino motor vehicle, which was insured against loss or damage through a policy of comprehensive and collision automobile coverage issued by the defendant. On this date, the plaintiff notified the defendant that the vehicle " had sand in its gas tank as the result of tampering and/or vandalism." On or about September 23, 2015, the plaintiff notified its insurance agent to place a claim to the defendant regarding the damage. Sometime between September 23, 2015 and October 13, 2015, the defendant retained an adjuster to investigate the damage and estimate the cost of repairs to the vehicle. The defendant's adjuster advised the plaintiff that the damage to the vehicle was the result of improper maintenance, not tampering or vandalism. Based on these findings, the defendant denied the plaintiff's claim. The plaintiff made repeated requests for a copy of the adjuster's report, all of which the defendant refused.
On or about November 16, 2015, the plaintiff had the damaged vehicle repaired. Later that month, the defendant sent another adjuster to inspect the vehicle. This time, however, the adjuster advised the plaintiff that the problem was not due to improper maintenance, but was instead due to a manufacturing defect. Again, the defendant refused to send a copy of the adjuster's report to the plaintiff.
The plaintiff claims that, notwithstanding the defendant's obligation to pay its timely claim under the policy, the defendant has breached the insurance contract in one or more of seven ways. The plaintiff alleges that the defendant: (1) failed to make payment to the plaintiff for its losses when it knew that it was entitled to payment under its insurance contract; (2) delayed payments knowing that the plaintiff's claims for benefits were valid; (3) withheld payments while knowing that the plaintiff's claims were valid; (4) failed to pay the plaintiff for its losses at a time when the defendant had insufficient information in its possession to justify denying the plaintiff's claim; (5) failed to reasonably and promptly investigate and process the plaintiff's claims under its insurance contract; (6) failed to make good faith efforts " to effectuate a prompt, fair and equitable settlement of the plaintiff's claim when liability was reasonably clear"; and (7) failed to provide a reasonable explanation of " the basis relied upon in the subject insurance contract, in relation to the applicable facts, for the denial of the plaintiff's claim."
The plaintiff repeats the allegations of count one in count two and further alleges that the defendant has breached the implied covenant of good faith and fair dealing. Specifically, count two alleges that " the defendant's actions were further done with a dishonest purpose and/or were maliciously, willfully or intentionally done to deny the plaintiff proceeds which were due to them and/or was done solely to benefit the [defendant], all to the detriment of the plaintiff."
In count three, the plaintiff again repeats and re-alleges counts one and two and alleges that " the aforesaid acts . . . and the defendant's failure to settle the plaintiff's claim have resulted in unfair insurance claim settlement practices in violation of General Statutes § § 38a-815 and 38a-816, which wrongful actions were committed against insureds, including the plaintiff, with such frequency to indicate a general business practice." The plaintiff further alleges that the defendant's unfair insurance settlement practices " have resulted in unfair trade practices in violation of General Statutes § § 42-110a et seq., and that the plaintiff has been damaged by the defendant's actions.
General Statutes § 38a-815 provides in relevant part: " No person shall engage in this state in any trade practice which is defined in section 38a-816 as . . . an unfair method of competition or an unfair or deceptive act or practice in the business of insurance . . ."
General Statutes § 38a-816(6), in turn, provides in relevant part: " The following are defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance . . . Unfair claim settlement practices. Committing or performing with such frequency as to indicate a general business practice any of the following . . . failing to acknowledge and act with reasonable promptness upon communications with respect to claims arising under insurance policies . . . refusing to pay claims without conducting a reasonable investigation based upon all available information, failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed, not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear . . . failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement . . ."
The defendant now moves to strike counts two and three of the complaint. As to count two, the defendant argues that the plaintiff has failed to allege sufficient facts that would, if proven, establish breach of the covenant of good faith and fair dealing in the insurance contract between the parties. The defendant argues that a dishonest purpose, sinister motive or malice on the part of the defendant in its dealings with the plaintiff is a necessary element in a cause of action for bad faith, or breach of the covenant of good faith and fair dealing. And while the plaintiff has alleged that the defendant acted with malicious or dishonest intent in its denial of coverage, it has not alleged the factual basis of such a claim.
With respect to the CUIPA and CUTPA claims in count three, the defendant argues that the plaintiff fails to allege sufficient facts which, if proven, would indicate that the defendant engages in a pattern of unfair insurance settlement practices. Merely stating that the defendant has engaged in unfair settlement practices with other insureds that it covers does not sufficiently state a pattern and practice of unfair insurances practices or unfair trade practices. Both counts, in other words, state the elements of their respective causes of action in conclusory fashion, without specific facts to support the allegations. Both causes of action, therefore, the defendant argues, are insufficient as a matter of law and should be stricken.
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 . . . A motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court . . . We take the facts to be those alleged in the complaint . . . and we construe the complaint in the manner most favorable to sustaining its legal sufficiency . . . Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Citations omitted; internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). " A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." Novametrix Medical Systems, Inc. v. BOC Group, Inc., 224 Conn. 210, 215, 618 A.2d 25 (1992).
" It is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those necessarily implied from the allegations are taken as admitted." (Internal quotation marks omitted.) Doe v. Board of Education, 76 Conn.App. 296, 299-300, 819 A.2d 289 (2003). " The role of the trial court [when ruling on a motion to strike is] to examine the [complaint], construed in favor of the plaintiffs, 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).
A. Breach of the Covenant of Good Faith and Fair Dealing
" Every contract carries an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement." Habetz v. Condon, 224 Conn. 231, 238, 618 A.2d 501 (1992). " Designed to fulfill the reasonable expectations of the contracting parties as they presumably intended, the covenant requires that neither party do anything that will injure the right of the other to receive the benefits of the agreement." (Internal quotation marks omitted.) Cornerstone Realty, Inc. v. Dresser-Rand Co., 993 F.Supp. 107, 110 (D.Conn. 1997) (citing Home Ins. Co. v. Aetna Life & Casualty Co., 235 Conn. 185, 200, 663 A.2d 1001 (1995)). " To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith . . . Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive . . . Bad faith means more than mere negligence; it involves a dishonest purpose." (Internal quotation marks omitted.) Rafalko v. University of New Haven, 129 Conn.App. 44, 51, 19 A.3d 215 (2011). It is also the law, however, that " there is no breach of an implied covenant of good faith where a party to a contract has done what provisions of the contract expressly gave him the right to do." Adams v. G.J. Creel and Sons, Inc., 320 S.C. 274, 277, 465 S.E.2d 84 (S.C. 1995).
Our Supreme Court has recognized an implied covenant of good faith and fair dealing in insurance contracts. See, e.g., Buckman v. People Express, Inc., 205 Conn. 166, 170, 530 A.2d 596 (1987); Hoyt v. Factory Mutual Liability Ins. Co., 120 Conn. 156, 159, 179 A. 842 (1935). The court agrees with the defendant that in order to state a cause of action for bad faith against an insurer, or breach of the covenant of good faith and fair dealing, the plaintiff must allege more than a mere failure to provide to the plaintiff what it expected to receive under the policy. In an insurance context, " bad faith" is defined as the opposite of good faith, generally implying a design to mislead or to deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation not prompted by an honest mistake as to one's rights or duties . . . Bad faith is not simply bad judgment or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity . . . It contemplates a state of mind affirmatively operating with furtive design or ill-will." Hutchinson v. Farm Family Casualty Ins. Co., 273 Conn. 33, 42, n.4, 867 A.2d 1 (2005).
In the present case, the plaintiff has not alleged facts which, if proven, would establish that the defendant has breached a covenant of good faith and fair dealing. In construing the complaint in light most favorable to the plaintiff, the seven allegations of specific wrongful conduct do not claim that the defendant acted with a furtive design in its dealings with the plaintiff, or demonstrate that the defendant acted from a sinister motive or with malice toward the plaintiff. Each count of the plaintiff's complaint, in fact, includes the reasons why the defendant denied the plaintiffs claim. The plaintiff may disagree with the defendant's coverage decision. However, the plaintiff's allegations (1) that the defendant acted " with a dishonest purpose" and/or (2) that its actions were done " maliciously, " are legal conclusions. A motion to strike " admits well pleaded facts but does not admit any legal conclusions or the truth or accuracy of opinions stated in the pleadings." Bridgeport v. C.R. Klewin Northeast, LLC, 51 Conn.Supp. 1, 4, 971 A.2d 864 (2007). Count two, therefore, fails to state a claim upon which relief can be granted.
B. Violations of the Connecticut Unfair Trade Practices Act
CUTPA provides that " [n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." General Statutes § 42-110b(a). " It is well settled that in determining whether a practice violates CUTPA, [our Supreme Court] has adopted the criteria set out in the cigarette rule by the [F]ederal [T]rade [C]ommission for determining when a practice is unfair: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law or otherwise--in other words, it is within at least the penumbra of some common law, statutory or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive or unscrupulous; and (3) whether it causes substantial injury to consumers, [competitors or other businesspersons] . . . All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three." (Internal quotation marks omitted.) Naples v. Keystone Building & Development Corp., 295 Conn. 214, 227-28, 990 A.2d 326 (2010).
In Mead v. Burns, 199 Conn. 651, 509 A.2d 11 (1986), the Supreme Court held that CUTPA applied to insurance practices, but also held that more than a single act of misconduct must be alleged in order to state a CUTPA claim. Id., 659. " [A] CUTPA claim based on an alleged unfair claim settlement practice prohibited by § 38a-816(6) [requires] proof, as under CUIPA, that the unfair settlement practice [has] 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). In Quimby v. Kimberly Clark Corp., 28 Conn.App. 660, 613 A.2d 838 (1992), the Appellate Court held that in order to state a claim for relief under CUTPA, " [t]he plaintiff must allege that the defendant has committed the alleged wrongful acts with such frequency as to indicate a general business practice." Id., 672.
There is a split of authority in the Superior Court on the degree of specificity required to satisfy the element of pleading a general business practice in a CUTPA claim. The court recognizes that there are several cases which hold that an allegation of a general business practice of unfair settlement practices by an insurer, without pleading additional underlying facts, is sufficient to withstand a motion to strike. See, e.g., Twin Summer Condominium Ass'n, Inc. v. Travelers Indemnity Corp., Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. UWY-CV-08-5010277-S (April 3, 2009, Eveleigh, J.) [47 Conn. L. Rptr. 487, ] (" a general allegation of a general business practice under CUIPA is sufficient to withstand a motion to strike"); Nation v. Allstate Ins. Co., Superior Court, judicial district of Litchfield at Litchfield, CV-04-0093456-S (September 7, 2005, Trombley, J.) [39 Conn. L. Rptr. 886, ] (same); Lamour v. Allstate Ins. Co., Superior Court, judicial district of Ansonia-Milford at Milford, CV-95-049034-S (February 15, 1995, Thompson, J.) [13 Conn. L. Rptr. 496, ] (" the plaintiff alleges that the defendant has made it a general business practice to undervalue claims and require its insureds to file suit. This allegation is sufficient to withstand the [m]otion to [s]trike"). See also Fradera v. State Farm Mutual Automobile Ins. Co., Superior Court, judicial district of New Haven at Meriden, CV-11-6003104-S (July 26, 2013, Fischer, J.); Katz v. Hartford Financial Services Group, Inc., Superior Court, judicial district of Hartford at Hartford, CV-11-6020408-S, (May 11, 2012, Domnarski, J.); Nationwide Mutual Ins. Co. v. Pasiak, Superior Court, judicial district of Stamford-Norwalk, Complex Litigation Docket, Docket No. X08FS-CV084015401, (November 30, 2011, Brazzel-Massaro, J.).
The plaintiff cites Urban Apparel Plus, Inc. v. Sentinel Ins. Co., Ltd., Superior Court, judicial district of New Haven at New Haven, Docket No. CV-13-6035293-S (October 31, 2013, Fischer, J.) [57 Conn. L. Rptr. 124, ]. In Urban Apparel, the defendant insurer moved to strike a similar count against it claiming CUTPA violations. The plaintiff alleged, as in the present case, that the defendant had committed unfair and improper insurance practices " with such frequency as to constitute a general business practice of insurance misconduct." The plaintiff also alleged numerous other cases wherein insureds have allegedly been the subject of unfair insurance practices committed by the defendant . . . as well as " numerous complaints on file with the State of Connecticut Insurance Department and Insurance Departments of other states." In ruling on the defendant's motion, the court noted the inherent problem of preventing a plaintiff from alleging a business practice before he has an opportunity to conduct pretrial discovery of the insurer's history of settling claims, and denied a motion to strike a claim of general business practice that did not contain specific reference to other examples of the insurer's conduct. The plaintiff in the present case asks the court to follow this line of cases and deny the defendant's motion to strike count three.
Other Superior Court cases, however, have held that allegations of a general business practice in a CUTPA claim are insufficient to withstand a motion to strike. See, e.g., Gesswein Realty, LLC v. Peerless Ins. Co., Superior Court, judicial district of Fairfield at Bridgeport, CV-13-6032847-S, (September 13, 2013, Radcliffe, J.) (" [m]erely representing that the conduct of the defendants represents a general business practice `on information and belief, ' is insufficient to allege a claim pursuant to the Connecticut Unfair Trade Practices Act"); Caminiti v. Travelers Home & Marine Ins. Co., Superior Court, judicial district of New Britain at New Britain, CV-12-6016611-S, (March 7, 2013, Gleeson, J.) (finding that the plaintiff's allegations fail to plead factual allegations to support a pattern of general business practice of unfair claim settlement practices).
In Ferrante v. Allstate Property & Casualty Ins. Co., Superior Court, judicial district of New London at New London, CV-10-6003787-S (July 21, 2011, Cosgrove, J.) [52 Conn. L. Rptr. 334, ], the plaintiff brought a five-count complaint against her insurance company, which included violations of CUTPA and CUIPA. As in Urban Apparel, the plaintiff in Ferrante listed seventeen Superior Court cases in which the defendant insurer was named in to support of her allegation that the defendant had engaged in a general business practice of bad faith coverage denials. The defendant requested that the plaintiff revise her complaint to delete these allegations. In overruling the plaintiff's objection to this request, the court ruled that " [t]he plaintiff's string citation merely stands for the proposition that the defendant has been sued for unfair settlement practices. Without more, this represents only a legal conclusion and does not constitute proper fact pleading as required by Practice Book § 10-1, which states: " Each pleading shall contain a plain and concise statement of the material facts on which the pleader relies, but not of the evidence by which they are to be proved."
The court agrees with the second line of cases cited above that require a plaintiff to make specific allegations of the misconduct underlying alleged CUTPA violations by an insurance company. In the court's opinion, an allegation that the insurer engaged in bad faith denials of coverage against other insureds " with such frequency to indicate a general business practice, " without specific reference to other instances of actual misconduct, does not sufficiently state a CUTPA violation against an insurer. Connecticut is a fact pleading state. The plaintiff is required to set forth the specific facts--not legal conclusions--upon which his claims are based. Without more specific factual allegations establishing a pattern and practice of unfair settlement practices by the defendant, count three of the plaintiff's revised complaint alleges no more than a single coverage dispute between an insured and its insurer which does not set forth a legally sufficient claim of a CUTPA violation.
Conclusion
For the foregoing reasons, the defendant's motion to strike counts two and three are granted.