Opinion
HHDCV146052858S
05-03-2016
Virgil Seeley et al. v. State Farm Fire & Casualty Co. et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO DISMISS (#133)
Sheila A. Huddleston, J.
The plaintiffs, Virgil and Gervaise Seeley, brought this breach of contract action in two counts to recover damages for losses they sustained when a pipe froze in an exterior wall of their condominium unit, resulting in water damage to the unit and to their personal property. The first count is directed to State Farm Fire & Casualty Corporation, based on a condominium unit owner policy purchased by the plaintiffs. The second count is directed to QBE Insurance Corporation (QBE), which issued an insurance policy to Waters Edge Condominium Association. QBE now moves to dismiss the second count asserting that the plaintiffs did not purchase the QBE policy and are not named insureds or third-party beneficiaries under the policy, and that they therefore lack standing to assert a direct claim against QBE. The plaintiffs argue, in response, that they are intended third-party beneficiaries under the policy. The court concludes that the plaintiffs have raised an arguable and colorable claim that they are intended third-party beneficiaries of the Waters Edge policy, and accordingly, the motion to dismiss is denied.
A motion to dismiss tests whether the court is without jurisdiction. Wilcox v. Webster Ins., Inc., 294 Conn. 206, 213, 982 A.2d 1053 (2009). " The issue of standing implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss . . . [I]t is the burden of the party who seeks the exercise of jurisdiction in his favor . . . clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute." (Citation omitted; internal quotation marks omitted.) Id., 213-14. " Standing requires no more than a colorable claim of injury; a [party] ordinarily establishes . . . standing by allegations of injury [that he or she has suffered or is likely to suffer]. Similarly, standing exists to attempt to vindicate arguably protected interests." Id., 214.
Standing is established by showing that a party is either statutorily or classically aggrieved. Id. " The fundamental test for determining [classical] aggrievement encompasses a well-settled twofold determination: first, the party claiming aggrievement must successfully demonstrate a specific, personal and legal interest in [the subject matter of the challenged action], as distinguished from a general interest, such as is the concern of all members of the community as a whole. Second, the party claiming aggrievement must successfully establish that this specific personal and legal interest has been specially and injuriously affected by the [challenged action] . . . Aggrievement is established if there is a possibility, as distinguished from a certainty, that some legally protected interest . . . has been adversely affected." (Internal quotation marks omitted.) Id., 214-15.
In its motion to dismiss, QBE argues that only a named insured has the right to enforce a contract of insurance. In support of its motion, it submitted several exhibits, including an affidavit from an executive adjuster stating that QBE never intended to confer any enforceable rights under the policy on unit owners or any other third parties, a copy of the Waters Edge policy at issue, a copy of the Waters Edge Association bylaws, discovery responses by the plaintiffs, and summary decisions by Superior Court judges granting motions to dismiss without written decisions, but apparently in response to arguments similar to those made here. Its principal arguments are that the plaintiffs are not named insureds and that the terms of the policy itself refute the plaintiffs' claim to be third-party beneficiaries under the policy. With respect to the third-party beneficiary issue, QBE relies primarily on cases from other states in which courts have rejected third-party beneficiary claims by condominium unit owners.
The plaintiffs implicitly acknowledge that they are not named insureds under the QBE policy issued to Waters Edge. In support of their claim that they are intended third-party beneficiaries of that policy, the plaintiffs rely primarily on two recent Superior Court decisions in which the court has concluded that condominium unit owners are third-party beneficiaries of property insurance policies purchased by their condominium association. The first of those cases involved a condominium policy issued by QBE, which seems in material respects to have been very similar to the policy at issue in count two of this case. See O'Connor v. QBE Ins. Corp., Inc., Superior Court, judicial district of New Haven, Docket No. CV12-6032396S (March 12, 2015, Wilson, J.) . In that case, the court considered that, although the plaintiff was not a named insured under the policy, the individual units were insured by the policy and the QBE policy was, by its own terms, primary over any insurance purchased by the unit owner. Id. In addition, the insurer reserved the right to adjust losses under the policy directly with the unit owners in satisfaction of its obligations to the named insured, the condominium association. Id. The court distinguished a number of out-of-state cases on which QBE relied, concluding that their holdings did not apply in light of the foregoing terms of the policy, which the court construed as disclosing the parties' intent that the unit owners would have enforceable rights under the policy. Id.
Applying different reasoning, in Boyle v. Apple Hill Condominium Ass'n, Superior Court, judicial district of Hartford, Docket No. CV-12-6030723-S, (December 29, 2014, Peck, J.), the court concluded that individual unit owners were intended third-party beneficiaries of a property insurance policy purchased by their condominium association because of the statutory policy found in General Statutes § 47-255(b), which generally requires condominium associations to maintain insurance on the common elements of condominium premises and on improvements and betterments in the individual units unless the executive board decides not to obtain such insurance, and in § 47-255(d), which requires that a condominium association must provide that each unit owner is an insured person with respect to liability arising out of his interest in the common elements or his membership in the condominium association.
The plaintiffs contend that the court should deny the motion to dismiss and expressly find that it was brought without probable cause because the O'Connor decision, in particular, is dispositive. QBE argues that the courts in O'Connor and Boyle reached incorrect conclusions and should not be followed. QBE points to additional evidence and contractual terms claimed to show that QBE never intended to assume a direct obligation to individual unit owners.
This court recognizes that the decisions in O'Connor and Boyle are not binding upon this court, but may be considered persuasive authority, just as the decisions from other states, cited by QBE, may be regarded as persuasive but not controlling authority. The court, however, is mindful that its role in deciding a motion to dismiss based on a lack of standing is limited to determining whether the plaintiffs have made a colorable claim to have a specific personal and legal right that has been specifically and injuriously affected. In a case that similarly raised an issue of standing as a third-party beneficiary of an insurance contract, our Supreme Court reversed a trial court's dismissal of an action, concluding that the plaintiff had raised at least a colorable claim to have such status. As the court observed, " [a] third-party beneficiary may enforce a contractual obligation without being in privity with the actual parties to the contract . . . Therefore, a third-party beneficiary who is not a named obligee in a given contract may sue the obligor for breach." (Footnote omitted; internal quotation marks omitted.) Wilcox v. Webster Ins., Inc., supra, 294 Conn. 217.
" [T]he ultimate test to be applied [in determining whether a person has a right of action as a third-party beneficiary] is whether the intent of the parties to the contract was that the promisor should assume a direct obligation to the third-party [beneficiary] . . ." (Internal quotation marks omitted.) Wasniewski v. Quick & Reilly, Inc., 292 Conn. 98, 109, 971 A.2d 8 (2009). " [T]hat intent is to be determined from the terms of the contract read in the light of the circumstances attending its making, including the motives and purposes of the parties." (Internal quotation marks omitted.) Id. Although " it is not [necessary that] in all [circumstances] there [must] be express language in the contract creating a direct obligation to the claimed third-party beneficiary, " the Supreme Court has emphasized that " the only way a contract could create a direct obligation between a promisor and a third-party beneficiary would have to be, under our rule, because the parties to the contract so intended." (Internal quotation marks omitted.) Id.
This court, unlike the courts in O'Connor and Boyle, is not persuaded that the plaintiffs have definitively established their standing as third-party beneficiaries of the contract. Many of the points raised by QBE have some persuasive force and do not appear to have been raised or addressed in the O'Connor and Boyle cases. But neither is the court persuaded that QBE has shown that the insurance contract unambiguously refutes the plaintiffs' claim to be third-party beneficiaries of the policy. For instance, without further explanation or context, the court is not persuaded that the " No Benefit to Bailee" provision cited by QBE is intended to negate any enforceable rights of unit owners. The facts that the QBE property insurance expressly covers the individual units and is primary with respect to any coverage obtained by the unit owners gives the plaintiffs at least a colorable claim to be third-party beneficiaries of the QBE contract.
In Wilcox, the Supreme Court did not conclude that the plaintiff " definitively [was] a third-party beneficiary" but concluded that he had raised " an arguable and colorable claim that he is, and, therefore, he meets the requirements of standing." Wilcox v. Webster Ins., Inc., supra, 294 Conn. 218. Similarly, here, the plaintiffs have pointed to provisions in the policy that expressly provide insurance for their unit; that insurance is primary to the policy they purchased from State Farm; and the QBE policy allows QBE to adjust claims directly with the unit owners. The plaintiffs have also alleged, and it is not disputed, that QBE considered a claim regarding their water damage and refused to pay it. These allegations are sufficient to establish a colorable and arguable claim that the plaintiffs have a specific personal and legal interest in the policy and that they have been specially and injuriously affected by QBE's refusal to pay their claim. This is sufficient to satisfy the test for determining classical aggrievement, and, accordingly, they have standing to bring their claims against the defendant.
The motion to dismiss is denied.