Opinion
No. 563041
September 16, 2004
MEMORANDUM OF DECISION RE DEFENDANT'S MOTION TO STRIKE #144
This action arises out of a casualty and liability insurance policy procured by Virgil Gifford, a home improvement contractor, from Parsons Mutual Insurance Company (Parsons), the insurer, through Fallon Insurance Agency, Inc., the defendant and agent of Parsons. Mr. Gifford obtained the policy for purposes of insuring himself against any liability incurred as a result of the cabinetry and carpentry work he performed on the home of Shabnaz Nazami, the plaintiff. Parsons and the defendant issued a certificate of casualty and liability insurance to the plaintiff designating the plaintiff as the certificate holder. The certificate specified May 15, 2001 as the policy effective date and May 15, 2002 as the policy expiration date.
On July 26, 2002 the plaintiff filed a summons and complaint against Mr. Gifford, Parsons and the defendant seeking recovery for the damages that the plaintiff alleges arose from the work performed on her home by Mr. Gifford. The plaintiff maintains that when she attempted to recover insurance proceeds for the damage under Mr. Gifford's policy the defendant apprised her that Parsons had previously terminated the policy for nonpayment of the premiums.
The plaintiff directs the second count of the complaint against the defendant. She alleges that by entering May 15, 2002 as the policy expiration date in the certificate of insurance, the defendant falsely represented the duration of coverage and, consequently, misled her into believing that coverage was effective until such date. The plaintiff further alleges that the defendant routinely engaged in the practice of post dating expiration dates for the benefit of its clients. Based on these allegations, the plaintiff asserts a claim in common-law fraud, as well as violations of the Connecticut Unfair Insurance Practices Act, CUIPA, specifically General Statutes § 38a-816(1)(a) and (6)(a), and the Connecticut Unfair Trade Practices Act, CUTPA, General Statutes § 42-110b, against the defendant. In response, the defendant moves to strike the count against it on the grounds that the plaintiff has not stated a legally sufficient claim for fraud or a cause of action pursuant to CUIPA or CUTPA.
General Statutes § 38-816(1)(a) provides in relevant part that the "issuing . . . any . . . statement . . . which . . . [m]isrepresents the benefits, advantages, conditions or term, of any insurance policy" constitutes an unfair and deceptive act or practice in the business of insurance.
General Statutes § 38-816(6)(a) defines unfair claim settlement practices as "[m]isrepresenting pertinent facts or insurance policy provisions relating to . . . coverage" "with such frequency as to indicate a general business practice."
General Statutes § 42-110b(a) provides in relevant part: "No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce."
"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). "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." (Internal quotation marks omitted.) Commissioner of Labor v. C.J.M. Services, Inc., 268 Conn. 283, 292, 842 A.2d 1124 (2004). "A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 498.
"The essential elements of an action in common law fraud . . . are that[:] (1) a false representation was made as a statement of fact; (2) it was untrue and known to be untrue by the party making it; (3) it was made to induce the other party to act upon it; and (4) the other party did so act upon that false representation to his injury." (Internal quotation marks omitted.) Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 777, 802 A.2d 44 (2002). "Where a claim for damages is based upon fraud, the mere allegation that a fraud has been perpetrated is insufficient; the specific acts relied upon must be set forth in the complaint." Maruca v. Phillips, 139 Conn. 79, 81, 90 A.2d 159 (1952).
The plaintiff asserts that the expiration date specified by the defendant in the certificate of insurance constitutes a "false representation" sufficient to support a fraud cause of action. A provision immediately above the description of the insurance policy states: "THE INSURANCE AFFORDED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES." This provision should have alerted the plaintiff that the terms entered in the certificate were not absolute, but subject to change according to the terms and conditions of the underlying insurance contract.
In this case, one of the conditions to continuing coverage was the regular remittance of premium payments to the insurer. Mr. Gifford did not promptly make such payments, thus, Parsons terminated coverage several months in advance of the expiration date. Consistent with the terms and conditions of the contract of insurance, Parsons acted within its purview when it terminated Mr. Gifford's policy for nonpayment.
Moreover, the certificate contained two disclaimers of liability specifically directed toward the certificate holder, the first stating, "THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER," and the second specifying that "[t]he certificate of insurance . . . does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder . . ." These provisions should have placed the plaintiff on notice not to rely on the terms enumerated within the certificate as absolute guarantees. In the complaint, the plaintiff even concedes that neither the defendant nor the insurer expressly guaranteed that coverage would last until the expiration date. This acknowledgment inherently contradicts her assertion that the defendant falsely represented that the insurance policy would last until the expiration date.
An action in fraud cannot stand in the absence of facts supporting the existence of a false representation. In this case, the defendant's specification of an expiration date on the certificate of insurance does not constitute a false representation as it was merely a prospective estimate of the duration of the policy. Consequently, the plaintiff has failed to state a sufficient fraud cause of action.
Additionally, in the second count of the complaint, the plaintiff asserts a "CUIPA via CUTPA" claim against the defendant. The plaintiff advances that the defendant's specification of an expiration date later than the actual termination date and its subsequent failure to apprise the plaintiff of the early termination of the policy comprises a misrepresentation violative of CUIPA. The plaintiff brings a CUTPA claim in conjunction with the CUIPA cause of action because CUIPA alone does not allow for a private cause of action. CUTPA provides, however, for a private right of action for alleged CUIPA violations when asserted together with a CUIPA claim. Mead v. Burns, 199 Conn. 651, 663, 509 A.2d 11 (1986).
Initially, the court notes that the plaintiff has not alleged that she is anything more than a certificate holder under the policy. As a certificate holder, the plaintiff is merely a third party to the contract of insurance between Mr. Gifford and Parsons. See K-Mart Corp. v. U.S. Fire Ins. Co., Superior Court, judicial district of Hartford, Docket No. CV 96 0565206 (February 19, 1998, Rittenband, J.). The plaintiff's third-party status triggers the threshold question of whether a third-party claimant may assert a CUIPA and CUTPA cause of action against the insurer of another.
"Our appellate courts have not addressed the issue of whether CUTPA remedies based on CUIPA violations may be sought by injured parties who are not the insured." Estate of Ridgeway v. Cowles Connell, Superior Court, complex litigation docket at Middletown, Docket No. X04 CV 03 0103516 (May 21, 2004, Quinn, J.). The majority of superior courts have, however, held that "[u]nfair claims settlement practices have been held to be actionable for insureds only, not for third party claimants." (Internal quotation marks omitted.) Izzo v. Kruk, Superior Court, judicial district of New Haven, Docket No. CV 468089 (April 29, 2003, Gilardi, J.) ( 34 Conn. L. Rptr. 441); see also Cyr v. Popick, Superior Court, judicial district of New Britain, Docket No. CV 03 052166 (January 13, 2004, Murray, J.). The rationale is that "the language of CUIPA . . . does not explicitly create a duty of an insurance company to a third party claimant. CUIPA defines [u]nfair claim settlement practices in a way that refers to insureds, not third parties." (Internal quotation marks omitted.) D'Alessandro v. Clare, Superior Court, judicial district of Middlesex at Middletown, Docket No. CV 97 0084006 (April 1, 1999, Schuman, J.) ( 24 Conn. L. Rptr. 325, 326), aff'd, 74 Conn.App. 177, 812 A.2d 76 (2002).
If an insurer does not owe a duty to settle claims fairly to third parties, then by logical inference, the insurer's agent also does not owe such a duty to third parties. In this case, Parsons did not owe a duty under CUIPA to the plaintiff because of the plaintiff's status as a third-party claimant. Ergo, the defendant, as Parsons' agent, also did not owe a duty to the plaintiff. In the absence of such a duty, the plaintiff has failed to allege that the defendant engaged in unfair insurance practices violative of CUIPA.
Furthermore, the plaintiff has failed to allege facts adequate to support a claim that the defendant engaged in unfair trade practices in violation of CUTPA. In Mead v. Burns, supra, 199 Conn. 663-66, our Supreme Court has implicitly held that "conduct that does not violate CUIPA does not constitute an unfair act or practice under CUTPA." See also, Izzo v. Kruk, supra, 34 Conn. L. Rptr. 442; Alessandro v. Claire, supra, 24 Conn. L. Rptr. 326. As the plaintiff has not alleged facts adequate to state a CUIPA cause of action, the plaintiff has also failed to sufficiently allege a CUTPA claim.
Accordingly, the court grants the defendant's motion to strike the second count of the operative complaint.
D. Michael Hurley, JTR