Opinion
No. CV07-5008280
January 18, 2008
MEMORANDUM OF DECISION ON MOTION TO STRIKE
I Procedural and Factual Background
Before this court is the motion to strike and memorandum of law filed on June 19, 2007, by the defendants, Allstate Insurance Company (Allstate) and Craig Golden (Golden). The defendants seek to strike the second, fourth, fifth, sixth, seventh, eighth and ninth counts of the plaintiff's amended complaint dated January 23, 2007 (complaint). The plaintiff, Susan Michalek, as executrix of the estate of Judith Garrity, filed her objection to the motion to strike and memorandum of law on September 10, 2007. The defendants filed a reply on September 19, 2007. The court heard oral argument on the short calendar on October 1, 2007. Based on the following reasons, this court grants the defendants' motion to strike as to counts two, four, six, eight and nine of the complaint, and denies the motion as to counts five and seven.
Viewing the complaint in a light most favorable to the plaintiff, the plaintiff alleges the following facts. Garrity renewed her insurance policy for her home with Allstate for the period beginning July 16, 2005, and ending on July 16, 2006. The contract provided $209,000 in dwelling protection and $104,500 in personal property protection. The policy covered damage due to fire.
On November 28, 2005, Allstate claims that it sent a letter to Garrity stating that it was canceling her insurance policy effective on December 16, 2005, for non-payment of premium unless it received a minimum payment of $102.30 by December 15, 2005. On December 22, 2005, Allstate sent a letter to Garrity and Garrity's mortgagee, Windsor Federal Savings and Loan, stating that it was canceling Garrity's insurance policy effective on January 10, 2006, if it did not receive payment by January 9, 2006.
Relying upon the second notice, Garrity hand-delivered a check for $253.00 to Golden, her insurance agent, on December 30, 2005 for the premium due. The office, however, closed early that day. Although Garrity spoke to Golden by telephone earlier that day, he did not inform her of this and so she left the check at Golden's office.
On January 2, 2006, a fire occurred at Garrity's residence, causing significant damage to the dwelling, destroying nearly all the personal property at the dwelling and causing Garrity's death. On or about January 3, 2006, one of Golden's employees discovered Garrity's check dated December 30, 2005, and deposited it the same day. On January 4, 2006, Allstate sent a letter to Garrity stating that her policy was cancelled, effective December 16, 2005, and reinstated on January 3, 2006. Subsequently, Allstate denied the plaintiff's claim for the January 2, 2006 loss.
The plaintiff brings the present action alleging breach of contract, breach of the covenant of good faith and fair dealing, negligence and bad faith claims against both Golden and Allstate, and violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110b et seq., and the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a-815 et seq., against Allstate.
II Standard of Review
The standard of review on a motion to strike is well established. "[A] motion to strike challenges the legal sufficiency of a pleading . . . 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 . . . [W]hat is necessarily implied [in an allegation] need not be expressly alleged . . . 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 facts necessarily implied from the allegations are taken as admitted . . . Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Violano v. Fernandez, 280 Conn. 310, 317-18, 907 A.2d 1188 (2006).
"For the purpose of ruling upon a motion to strike, the facts alleged in a complaint, though not the legal conclusions it may contain, are deemed to be admitted." (Internal quotation marks omitted.) Murillo v. Seymour Ambulance Ass'n., Inc., 264 Conn. 474, 476, 823 A.2d 1202 (2003).
III Counts Two and Four
In the second count of its complaint, the plaintiff alleges that Allstate breached the covenant of good faith and fair dealing. Allstate moves to strike count two on the grounds that it is duplicative with count four of the complaint, which alleges bad faith by Allstate, and because, while the plaintiff has explicitly alleged that Allstate has breached the covenant of good faith and fair dealing, it has not alleged sufficient supporting facts to support that conclusion.
"[I]t is axiomatic that the . . . duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship . . . In other words, every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement . . . The covenant of good faith and fair dealing presupposes that the terms and purpose of the contract are agreed upon by the parties and that what is in dispute is a party's discretionary application or interpretation of a contract term . . . 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." (Internal quotation marks omitted.) Renaissance Management Co. v. Connecticut Housing Finance Authority, 281 Conn. 227, 240, 915 A.2d 290 (2007).
"Bad faith has been defined in . . . in various ways. 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 . . . [B]ad faith may be overt or may consist of inaction, and it may include evasion of the spirit of the bargain." (Citations omitted; internal quotation marks omitted.) Landry v. Spitz, 102 Conn.App. 34, 42-43, 925 A.2d 334 (2007).
Here, the plaintiff alleges that Allstate breached the covenant of good faith and fair dealing by "improperly refusing this claim; . . . by failing to provide the representatives of the estate requested information pertaining to the claim, including, but not limited to, a complete copy of the insurance policy despite repeated requests for information; . . . repeatedly promising to provide a copy of the policy and then failing to do so; . . . sending confusing and conflicting notices of cancellation; . . . improperly processing the payment of Mrs. Garrity; and retaining premium payments tendered by Mrs. Garrity without providing any attendant benefit to Mrs. Garrity." Pl. Amend. Compl. ¶ 61. The plaintiff, however, has not alleged an interested or sinister motive on the part of Allstate, which is necessary to plead sufficient facts to support the clement of bad faith. Nor may a court "look beyond the complaint for facts not alleged." Holler v. Buckley Broadcasting Co., 47 Conn.App. 764, 769, 706 A.2d 1379 (1998).
The plaintiff's other allegations as to Allstate's improper refusal of the plaintiff's insurance claim, conflicting notices of cancellation and improper processing of Garrity's insurance premium payment similarly contain no allegation of a dishonest purpose. While they may sound in negligence, they simply do not rise to the level of bad faith because they lack any explicit or implicit allegation of an improper motive by Allstate.
According to the plaintiff's complaint, Allstate denied the plaintiff's claim because it was Allstate's understanding that the policy was not in effect at the time of the loss. It is not clear why conflicting notices of cancellation were sent, but there is no allegation that they were sent to confuse the plaintiff. Allstate received and processed Garrity's premium payment and correspondingly reinstated her insurance coverage, based upon its understanding of when payment was due and the previous status of the policy as cancelled. Bad faith is not merely error, it is a dishonest purpose. Landry v. Spitz, supra, 102 Conn.App. 42-43. Indeed, the appropriateness of Allstate's decision is not at issue in this count, but rather whether Allstate is alleged to have taken these actions with an interested or sinister motive.
In its memorandum in opposition to the motion, the plaintiff cites Connecticut Superior Court cases such as Fuhr v. GEICO, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 98 0167162 (February 3, 2000, D'Andrea, J.) [26 Conn. L. Rptr. 367] and Burnside v. Nationwide Mutual Ins. Co., Superior Court, judicial district of Fairfield, Docket No. CV 97 0343068 (September 18, 1997, Melville, J.) where the court denied a motion to strike the plaintiff's count asserting a breach of the covenant of good faith and fair dealing against an insurer. The allegations in those cases, however, stand in sharp contrast to the allegations in counts two and four of the complaint in that they allege facts which the plaintiff has not alleged here. In Fuhr, the plaintiff alleged, inter alia, that the defendant had "fail[ed] to attempt a settlement in good faith; . . . compel[ed] the plaintiff to initiate litigation to recover under the insurance contract . . . fail[ed] to investigate adequately the plaintiff's claim . . . [and] fail[ed] to respond promptly to the plaintiff's communications." Fuhr v. GEICO, supra, Superior Court, Docket No. CV 98 0167162. Similarly, in Burnside, the plaintiff alleged that the defendant "[c]ommitted unfair settlement practices by not attempting in good faith to effectuate prompt, fair and equitable resolution of the plaintiffs' claim for basic reparations benefits . . . [c]ompelled the plaintiffs to institute litigation to recover amounts due under the insurance contract . . . [and] [f]ailed to reasonably, promptly and adequately investigate plaintiffs' claim for basic reparations benefits . . ." Burnside v. Nationwide Mutual Ins. Co., supra, Superior Court, Docket No. CV 98 0343068.
The plaintiff has not alleged, inter alia, either that Allstate failed to properly investigate the plaintiff's claim, or that Allstate did not attempt in good faith to resolve the claim. As noted above, Allstate denied the claim because it was Allstate's belief that the insurance policy was not in effect at the time of the loss. The plaintiff has alleged only the legal conclusion that Allstate has breached the covenant of good faith and fair dealing. This is insufficient to survive a motion to strike without adequate supporting facts. Murillo v. Seymour Ambulance Ass'n., Inc., supra, 264 Conn. 476.
As such, based upon the allegations in her complaint, the plaintiff has not alleged sufficient facts to withstand Allstate's motion to strike as to count two.
As to count four of the complaint, which alleges bad faith, the plaintiff in its memorandum in opposition to the motion correctly argues that a bad faith claim, while similar, is distinct from a claim alleging breach of the covenant of good faith and fair dealing. Bad faith, however, is a necessary, but insufficient condition for a breach of the covenant of good faith and fair dealing. Renaissance Management Co. v. Connecticut Housing Finance Authority, supra, 281 Conn. 240. Thus, while counts two and four of the complaint are not duplicative, the plaintiff has, nevertheless failed to plead facts showing bad faith by Allstate, and as such, it cannot prevail either on its claim alleging bad faith, or on its claim alleging a breach of the covenant of good faith and fair dealing. Therefore, the court grants Allstate's motion to strike as to count two of the complaint alleging breach of the covenant of good faith and fair dealing against Allstate, and count four of the complaint, alleging bad faith.
B. Count Five
In the fifth count of her complaint, the plaintiff alleges that Golden breached his contractual obligations to Garrity by denying the plaintiff's claim, by claiming that Garrity's insurance policy was canceled at the time of the loss when payment was made prior to the fire and Allstate sent a letter stating it would not cancel the policy until January 10, 2006, by honoring the claim by Garrity's mortgagee, by failing to advise Garrity that his office would be closing early on December 30, 2005, and by sending conflicting and misleading notices of cancellation. Golden moves to strike this count of the complaint on the ground that there was no contractual relationship between Golden and Garrity, but rather, any contract was between Garrity and Allstate. Therefore, Golden argues, he cannot have breached a contractual obligation where no contractual relationship existed. The plaintiff argues in opposition that a breach of contract claim is appropriate against an insurance agent, citing Rametta v. Stella, 214 Conn. 484, 489, 572 A.2d 978 (1990) and Pinette v. North American Underwriters, Superior Court, judicial district of Litchfield, Docket No. CV 91 0057441 (August 24, 1995, Pickett, J.). In response, Golden asserts that the plaintiff grossly misreads Pinette and Rametta, which stand only for the narrow proposition that an insurance agent may be liable to an insured for failure to procure insurance.
"The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages." (Internal quotation marks omitted.) Whitaker v. Taylor, 99 Conn.App. 719, 728, 916 A.2d 834 (2007). "An insurance agent owes a duty to his principal to exercise reasonable skill, care and diligence in effecting the insurance, and any negligence or other breach on his part which defeats the insurance will render him liable to his principal for the resulting loss. Ursini v. Goldman, 118 Conn. 554, 559, 173 A. 789 (1934) . . . `Where he undertakes to procure a policy affording protection against a designated risk, the law imposes upon him an obligation to perform with reasonable care the duty he has assumed, and he may be liable for loss properly attributable to his default.' Id. Thus, an action against an insurance agent for failure to obtain insurance may be brought under a theory of either negligence or breach of contract. Rametta v. Stella, supra, 214 Conn. 489." (Citation omitted.) Pinette v. North American Underwriters, supra, Docket No. CV 91 0057441 (August 24, 1995, Pickett, J.) In light of the foregoing authority, the plaintiff has articulated sufficient facts to assert such a claim.
According to the plaintiff, Allstate claims to have cancelled the insurance policy prior to the loss, and as such, Golden failed to timely process Garrity's December 30, 2005 premium payment. Thus, this court is persuaded that the failure to timely process the premium is encompassed by Golden's contractual duty to procure insurance. The court here is asked only to decide whether the plaintiff has articulated a claim that sounds in breach of contract, not whether that claim will be prevail, for "[w]hether there was a breach of contract is ordinarily a question of fact." (Internal quotation marks omitted.) Rent-A-PC, Inc. v. Rental Management, Inc., 96 Conn.App. 600, 607, 901 A.2d 720 (2006). Therefore, this court denies Golden's motion to strike as to count five of the complaint alleging breach of contract.
C. Count Six
In the sixth count of the complaint, the plaintiff alleges that Golden breached the covenant of good faith and fair dealing in his contractual relationship with the plaintiff. Golden moves to strike this count on the ground that because no contract existed, no duty that requires a contract could have been breached. They also argue that the conduct.
alleged to violate the covenant of good faith and fair dealing is not Golden's, but that of Allstate. The plaintiff, relying upon its arguments in opposition to the motion as to counts two and five of the complaint, argues that the alleged conduct does rise to the level of a breach of the covenant of good faith and fair dealing, and that Golden can be liable to the plaintiff in contract, as well as negligence.
The plaintiff alleges that Golden breached the covenant of good faith and fair dealing with precisely the same conduct alleged against Allstate in count two of the complaint. While a contractual relationship did exist between Garrity and Golden for the reasons set forth in this court's analysis of the motion to strike as to count five, those allegations remain inadequate to articulate a claim for breach of the covenant of good faith and fair dealing for the reasons set forth in this court's analysis of the motion to strike as to counts two and four. Therefore, the court grants Golden's motion to strike as to count six of the complaint alleging breach of the covenant of good faith and fair dealing.
D. Count Seven
The seventh count of the complaint alleges negligence against Golden. Specifically, the plaintiff alleges that Golden improperly processed Garrity's December 30, 2005 premium payment, that Golden sent improper and confusing notices regarding the policy's cancellation, that Golden failed to notify Garrity that his office was closing early on December 30, 2005, and that Golden failed to properly notify Garrity that her policy was cancelled. Golden moves to strike this count on the ground that the plaintiff has not pleaded a duty between Golden and Garrity, and thus has not properly articulated a claim of negligence. Golden also argues that any duty owed to Garrity was owed by Allstate, not Golden. The plaintiff opposes on the ground that Golden was aware that Garrity was coming to make payment on December 30, 2005, encouraged her to come, but failed to advise her that the office was closing early. The plaintiff also argues that because Golden's office processed payments for the decedent, they had a duty to do so with reasonable care.
"The existence of a duty of care is an essential element of negligence . . . A duty to use care may arise from a contract, from a statute, or from circumstances under which a reasonable person, knowing what he knew or should have known, would anticipate that harm of the general nature of that suffered was likely to result from his act or failure to act." (Internal quotation marks omitted.) Ward v. Greene, 267 Conn. 539, 547, 839 A.2d 1259 (2004). While "[t]he conclusion of negligence is necessarily one of fact," (internal quotation marks omitted) Michalski v. Hinz, 100 Conn.App. 389, 401, 918 A.2d 964 (2007); Michaud v. Gurney, 168 Conn. 431, 434, 362 A.2d 857 (1975); these allegations are sufficient to establish on Golden a duty to Garrity to act reasonably, especially with respect to his handling of the premium payment. As set forth above in this court's analysis of the motion to strike as to count five, "an action against an insurance agent for failure to obtain insurance may be brought under a theory of either negligence or breach of contract." Rametta v. Stella, supra, 214 Conn. 489. The plaintiff sufficiently alleges that Golden's negligent failure to process properly Garrity's payment resulted in her inability to properly secure insurance.
Therefore, this court denies Golden's motion to strike as to count seven of the complaint alleging negligence.
B. Count Eight
Count eight identically recites count four, the plaintiff's bad faith claim against Allstate, but is here directed against Golden. As this court's analysis of Allstate's motion to strike as to counts two and four of the complaint makes clear, the plaintiff's allegations simply do not rise to the level of bad faith.
Therefore, this court grants Golden's motion to strike as to count eight of the complaint alleging bad faith.
F. Count Nine
The final count challenged by Allstate alleges violations of CUTPA and CUIPA by Allstate in its handling of the termination of the Garrity's policy, and in its handling of the plaintiff's claim. Allstate moves to strike count nine on the ground that the plaintiff has not alleged a general business practice, but only a solitary example of misconduct. Relying on Mead v. Burns, 199 Conn. 651, 509 A.2d 11 (1986), Allstate argues that a solitary allegation is insufficient to articulate a CUTPA violation based on CUIPA. The plaintiff objects on the ground that courts, after the Mead decision, have held that "[i]f the CUIPA action is based on violation General Statutes § 38a-816(1), [which defines unfair and deceptive insurance practices], the plaintiff need not allege more than a single act." Polchlopek v. Aetna Life Ins. Co., Superior Court, judicial district of Hartford, Docket No. CV 98 0530630 (June 3, 1994, Hennessey, J.). Allstate replies that the Superior Court in Polchlopek was mistaken, and is certainly not controlling over Mead, which was decided by our Supreme Court.
"It is well established that CUTPA affords a private cause of action to individuals. See, e.g., Fink v. Golenbock, 238 Conn. 183, 212, 680 A.2d 1243 (1996) (`CUTPA provides a private cause of action to "[a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a [prohibited] method, act or practice'"), quoting General Statutes § 42-110g(a). In Mead v. Burns . . . [the] court determined that individuals may bring an action under CUTPA for violations of CUIPA. In order to sustain a CUIPA cause of action under CUTPA, a plaintiff must allege conduct that is proscribed by CUIPA." (Citation omitted; internal quotation marks omitted.) Nazami v. Patrons Mutual Ins. Co., 280 Conn. 619, 625, 910 A.2d 209 (2006).
"[A] CUTPA claim based on the public policy embodied in CUIPA must be consistent with the regulatory principles established therein . . . [T]he definition of unacceptable insurer conduct in [§ 38a-816(6)] reflects the legislative determination that isolated instances of unfair insurance settlement practices are not so violative of the public policy of this state as to warrant statutory intervention." (Internal quotation marks omitted.) Lees v. Middlesex Ins. Co., 229 Conn. 842, 850-51, 643 A.2d 1282 (1994). "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." Id., 849.
"For a CUTPA/CUIPA claim to survive a motion to strike . . . the majority of superior court decisions have construed `[t]he frequently cited cases of Mead and Lees . . . [to] require that claims of unfair settlement practices under CUIPA [show] . . . more than a single act of insurer misconduct . . . [and] that there must be evidence of misconduct by the insurer in the processing of other policyholders' claims in order to rise to the level of a general business practice.' Southridge Capital Management, LLC v. Twin City Fire Ins. Co., Superior Court, complex litigation docket at Middletown, Docket No. X04 CV 02 103527 (June 3, 2005, Quinn, J.) (39 Conn. L. Rptr. 634)." Starview Ventures, LLC v. Acadia Ins., Superior Court, judicial district of New Haven, Docket No. CV 06 5003463S (October, 17, 2006, Skolnick, J.T.R.).
In the present case, the plaintiff has alleged that Allstate "conducted unfair claims settlement practices including, but not limited to: (a) misrepresenting pertinent facts or insurance policy provisions relating to coverage at issue; (b) failing to acknowledge and act with reasonable promptness upon communications with respect claims arising under the insurance policy; and (c) refusing to pay claims without conducting a reasonable investigation based upon all available information." Pl. Amend. Compl. ¶ 104. Paragraphs 104 (a) and (b) do not allege general business practices, as they concern Allstate's conduct only as to the plaintiff's claim. Construing the complaint in favor of sustaining its legal sufficiency, paragraph 104(c) can be read to concern a general business practice, as it alleges that Allstate refuses to pay claims without conducting a reasonable investigation. However, as Southridge and Starview make clear, "[a]n allegation of a general business practice, without supporting instances of insurer misconduct . . . would effectively permit a litigant to override . . . [the] CUIPA regulatory pattern." (Emphasis added.) Starview Ventures, LLC v. Acadia Ins., supra, Docket No. CV 06 5003463S. As more than a single act of misconduct is required to allege a general business practice, and as the plaintiff has failed to so allege, the count is not legally sufficient.
Therefore, this court grants Allstate's motion to strike as it pertains to count nine of the complaint alleging violations of CUTPA and CUIPA.
Conclusion
Based on the foregoing reasons, this court grants the defendants' motion to strike as to counts two, four, six, eight and nine of the complaint, and denies the motion as to counts five and seven.