Opinion
No. CV 03-0821900S
March 16, 2005
MEMORANDUM OF DECISION ON MOTION TO STRIKE
This action arises from the alleged failure of Marsh, U.S.A., a long-time insurance broker for Masonicare Corps. to add Pyramid Primary Care Physicians, P.C. ("Pyramid") a company newly acquired by Masonicare to Masonicare's existing policies with defendant insurance companies, St. Paul Mercury Insurance Co. and St. Paul Fire Marine Insurance Co. (collectively "St. Paul") and to provide coverage for certain professional liability claims filed against Pyramid, including the "Belko" and "Peck" claims.
The fourteen-count amended complaint filed on March 3, 2004, seeks a declaratory judgment as to whether Pyramid is covered (Count I); alleges breach of contract (Count II); seeks reformation (Count III); claims equitable estoppel (Count IV); waiver (Count V); and violation of CUTPA (Count VI) all against St. Paul, and alleges a variety of claims against Marsh, sounding in negligence, breach of contract, CUTPA, etc. (Counts VII through XIV).
St. Paul, on September 16, 2004, moved to strike count IV, V and VI directed against it.
I
In count four seeking equitable estoppel the plaintiffs allege that since 1996, they paid insurance premiums on a quarterly basis for the coverage provided under the policies, including professional liability coverage; beginning October 1, 1997, when the defendants raised the amount of the premium in response to the addition of Pyramid as an insured under the policies, the defendants accepted each premium payment from the plaintiffs and never communicated to the plaintiffs any notion which drew question as to whether Pyramid was insured under the professional liability coverage of the policies; the plaintiffs relied upon the defendants' acceptance of such premium payments and various communications between St. Paul, Marsh and/or the plaintiffs for its belief and understanding that Pyramid was covered under the policies for professional liability; further, that the plaintiffs reasonably relied on the conduct of the defendants in dealing with the Belko claim; and, that the plaintiffs made no effort to secure insurance for Pyramid for the same reason.
In count five, the plaintiffs allege that the defendants waived their right to disclaim coverage in the Peck and Belko actions or any other claims against Pyramid because the defendants continued to provide a defense for Pyramid even after it had disclaimed coverage for the Peck action on the grounds that Pyramid was not covered for professional liability and because the defendants investigated the Belko claim and subsequently provided defense to Pyramid.
Defendants move to strike counts four and five on the grounds that waiver and estoppel cannot create rights under a policy. As to count four, the defendant argues that the plaintiff has failed to sufficiently plead the prima facie elements of estoppel. As to count five, the defendants argue that the plaintiffs have failed to allege that the defendants knowingly relinquished their right to deny coverage.
Ordinarily, claims of estoppel and waiver are asserted as special defenses and not as causes of actions. Insurance contracts cannot be created by estoppel. That doctrine cannot be invoked by an insured to create a primary liability of the insurer for which all elements of a binding contract are necessary. Linemaster Switch Corporation v. Aetna Life and Casualty Corporation, et al., Conn.Sup. 8568, 15 Conn. L. Rptr. 223 (1995). That decision went on to state, "[i]t has been held repeatedly that the doctrines of waiver and estoppel cannot be used to extend the coverage of an insurance policy or create a primary liability but may only affect rights reserved therein. While an insurer may be estopped, by its conduct or knowledge or by statutes from insisting on a forfeiture, under no conditions can the coverage or restrictions on coverage be extended by waiver and estoppel."
In addition, in count IV plaintiff has failed to sufficiently plead the prima face elements of estoppel and in count V have failed to allege that the defendants knowingly relinquished their right to deny coverage.
Motion to strike counts IV and V is granted.
II
In count VI the plaintiffs allege that the defendants misrepresented to the insureds the fact that they were not covered under professional liability polices which were or should have been issued by the defendants wrongfully claiming that the defendants had not received applications for professional liability policies, when they had, and that the defendants committed such misrepresentations with such frequency as to indicate a general business practice, and that the defendants' actions thus constitute a violation of CUTPA (Gen. Stat. §§ 38a-815 et seq.)
"[A] CUTPA claim based on an alleged unfair claim settlement practice prohibited by § 38-816(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 . . . [If] the plaintiff's evidence [is] insufficient to satisfy the requirement under CUIPA that the defendant's alleged unfair claim settlement practices constituted a general business practice, the plaintiff's CUTPA claim [cannot] survive the failure of [the] CUIPA claim." (Citation omitted; internal quotation marks omitted.) Lees v. Middlesex Insurance, Co., 229 Conn. 842, 850-51, 643 A.2d 1282 (1994). Thus a CUTPA claim against an insurer depends on proof of a claim under CUIPA.
However, no appellate court nor the majority of superior court decisions have sanctioned a private cause of action under CUIPA. Warner v. Sanford Hall Agency, Superior Court, judicial district of Hartford, CV No. 398991 (Feb. 9, 1993, Wagner, J.) 9 Conn. L. Rptr. 333.
Because the plaintiff, as a private party, may not bring its private cause of action under CUIPA, the plaintiffs' CUTPA claim must fail accordingly. See Lees v. Middlesex Insurance, Co., supra, 228 Conn. 850-51.
In summary, motion to strike count IV, V and VI is granted.
Wagner, J. Judge Trial Referee