Opinion
No. CV 05-40106955
August 31, 2009
MEMORANDUM OF DECISION
As the parties know this is a suit brought by the plaintiff, homeowner, whose residence was severely damaged in a fire. It is brought against the Defendant business, which entered into a so-called Public Adjuster Employment contract with the Plaintiff. The complaint lies in several counts and very basically is grounded on allegations about various actions or failures to act by the Defendant in dealing with the Plaintiff's insurance company.
The present issue involves the admissibility into evidence of complaints filed by other clients of the Defendant with the Connecticut Insurance Department. The Plaintiff argues if admissible, evidence of these complaints could be used to establish a violation of CUTPA and CUIPA. In Mead v. Burns, 199 Conn. 651 (1986) the Court held that practices of insurance companies were subject to concurrent regulation under both acts, but a CUTPA claim must be based on a violation of CUIPA where the alleged misconduct is related to the insurance industry. And for there to be a CUIPA § 38a-816(6) violation it must be shown that a Defendant doing business in this industry committed acts of misconduct so frequently as to constitute a general business practice. The Complaints to the Insurance Department are being offered to establish such a general business practice.
The way the present issue has been framed it is largely irrelevant on this evidentiary issue whether a private cause of action is permitted under CUIPA. In Edible Arrangements v. Keh/L H. Brenner, CV 08-5019963 (December 29, 2008) this Court reversed an earlier position it had adopted in 1994 and concluded for the reasons stated in Edible Arrangements that a private cause of action does not lie under CUIPA.
(1)
The factual allegations underlying the claims against the Defendant are said to have taken place in the period of November 2002 through March 2003. The complaints sought to be introduced are Exhibits 33, 34, 35, 36, 37, 38, and 39, all of which have been marked for identification. The Court could find no Connecticut Appellate authority dealing with the issues raised and not much authority in other jurisdictions.
First it should be noted that the complaints made by other insured against the Defendant are obviously hearsay so that one question that must be addressed is whether they can come in as an exception to the hearsay rule. Even if such an exception could apply the question remains as to whether these exhibits are relevant to proving a general business practice.
(2)
The Court will first make some comments about certain aspects of the relevancy issue in the sense of whether and how prior complaints to a regulatory insurance agency can substantively qualify to show a general business practice.
(a)
The National Association of Insurance Commissioners developed model legislation designed to address problems presented by unfair claims settlement practices, Insurance Law Keeton L. Widiss, § 7.7(d). Our state along with others adopted this legislation and it is incorporated in § 38c-816(b) of the General Statutes. This provision of our law basically follows the model act, see Couch On Insurance; Vol 14; 204.50.
The preface to § 38a-816 states "The following are deferred as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance." Subsection (6) begins "Unfair claim settlement practices, committing or performing with such frequency as to indicate a general business practice any of the following." It then lists unfair claim settlement practices (a) through (o) or fifteen such practices. Couch On Insurance § 204.52 of vol. 14, says that the "general business practice" requirement cannot be satisfied by a single violation. The Plaintiff must show that the conduct in question constitutes more than (a) single violation of the statute in question, that the violations arise from separate discrete acts or admissions in claim settlement and they arise from habit, custom, usage or business policy of the insurer so that, viewing the insurer's conduct as a whole, the finder of fact is able to conclude that the practice or practices are sufficiently sanctioned by the insurance company, that the conduct can be considered a "general business practice," and can be distinguished by fair minds from a mere isolated event." Id. at pp 204-75, 204-76.
(b)
In Mead v. Burns what is now subsection (d) of § 38a-816(b) of the general statutes was before the Court. That subsection defines one type of unfair claim settlement practice as "(d) refusing to pay claims without conducting a reasonable investigation based upon all available information." The Court rejected the notion that this subsection applied " despite (the Plaintiff's) conceded failure to allege a general business pattern of deriliction in investigation," id., p. 657 (emphasis by this Court).
This just quoted language leads to an immediate problem. What if in a suit, such as this one, a particular unfair claim practice or several of them are alleged under subsection (6) which sets forth the types of unfair claims practices covered by the statute? To show a general business practice must the litigant show past complaints and practices of the same nature or can a plaintiff rely on past violations of other provisions of subsection (6) not actually alleged in the complaint?
The language of Mead seems to suggest that a Plaintiff must prove that there has been a general business practice as to the precise type of unfair claims practice alleged. But this precise issue was not before the Court; see Hubbell v. Trans World Life Ins. Co., 408 NE.2d 918, 919 (NY, 1980) which uses language of the same import as the quoted language in Mead.
West Virginia adopted the model act and it seems to take an explicit view that to prove a general business practice the precise conduct alleged to be an unfair claims practice need not be shown. That is "frequency in the statute must relate not only to repetition of the same violation, but to the occurrence of different violations," Jenkins v. J.C. Penny Cas. Co., 280 SE 2d 252, 260 (W.VA. 1981). This is true under their state's view even if multiple violations occur in the same claim so a fortiori it would seem to be true when complaints of others are involved. West Virginia's unfair claims practices legislation begins like our subsection (6); "Unfair claim settlement practices — No person shall commit or perform with such frequency as to indicate a general business practice any of the following"; then it lists violations (a) through (n) in language similar to our statute, see also later case of Dodrill v. Nationwide Mutual Ins. Co., 491 SE 2d 1, 12-13 (W.VA, 1990). The Court could find nothing else that was definitive. It is a difficult question. On the one hand subsection (6) and its unfair claims settlement practices provisions are ameliorative and all are aimed at protecting insureds from overreaching by insurance companies. On the other hand, we have the limiting language of Mead quoted above and as that case pointed out the language of the subsection must be interpreted in light of the fact that violations can have penal consequences, also some of the subsections of section (6) are not necessarily related; thus failure to respond with promptness to communications or to adopt reasonable standards for investigation do not suggest a predilection for settling claims for less than their reasonable value. Finally, there is the introductory language of subsection (6) itself, to repeat, "(6) Unfair claims settlement practices, committing or performing with such frequency as to indicate a general business practice any of the following "(emphasis by Court). What is the underlined language doing there? It appears to modify the general business practice. If it had been left out, a "general business practice" could be shown by proving the particular violation alleged in a suit plus any other violation of subsection (6) which may not be related to the violation of the subsection asserted in particular litigation. With "any of" in the subsection a more restrictive reading suggested by Mead seems to be warranted.
Also see language of Lees v. Middlesex Ins. Co., 229 Conn. 842, 851 (1994) where the Court noted the Plaintiff could not show the "defendant's alleged unfair claim settlement practices constituted a general business practice." Therefore the Court held "the Plaintiff's CUTPA claim could not survive the failure of her CUIPA claim." Id. Also at least see the language of the North Dakota case of Volk v. Wisconsin Mortgage Ins. Co., 474 N.W.2d 40 (1991), which interpreted its statute defining unfair claim settlement practices as "specifically requiring that the prescribed acts be performed with a frequency underrating a general business practice to constitute an unfair claim settlement practice" and citing Mead v. Burns.
In any event the factual analysis has to begin somewhere and the place to begin is the allegations in the CUIPA count where it is alleged:
42. Biller misrepresented pertinent facts and/or insurance policy provisions relating to coverages at issue under the Allstate Insurance Policy.
43. Biller failed to acknowledge and act with reasonable promptness upon communications with respect to Plaintiff's claims arising under the Allstate Insurance policy.
44. Biller did not attempt in good faith to effectuate prompt fair and equitable settlement of Plaintiff's claims in which liability had become reasonably clear.
45. Biller's actions and/or failures to act compelled plaintiff to institute litigation to recover amounts due under the Allstate policy.
These allegations fall under several subsections of the unfair claim settlement practices section (6) of, 38a-816 of the General Statutes.
(a) Misrepresenting pertinent facts of insurance policy provisions relating to coverage at issue.
(b) Failing to acknowledge and act with reasonable promptness upon communications with respect to claims arising under insurance policies . . .
(f) Not attempting in good faith to effectuate prompt fair and equitable settlements of claims in which liability has become reasonably clear.
(g) Compelling insurances to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately received in actions brought by such insurers.
The Court will later review the exhibits offered for identification to ascertain their relevancy in proving the general business practice requirement in light of its foregoing obligations.
(3)
The Court must first separately discuss the contents of the exhibits sought to be introduced into evidence. It will then try to apply the foregoing discussion in determining their admissibility. It will also discuss the separate questions of whether even granting their relevance, the exhibits should be admitted into evidence given their hearsay nature and the fact that the incidents discussed in the complaints and the complaints post date the occurrence of the alleged unfair claims practice in this case by two or three years.
(1) Exhibit 33 for Identification
The Plaintiff notes that the department's file indicates Biller was retained after suffering a residential fire loss on May 23, 2003. On August 21, 2006 the insured wrote the department that she hired Biller, received partial payment from the company to make repairs, gave a receipt to Biller, but never heard anything. The complaint was sent to the carrier and Biller by the department and the department requested an immediate report. Biller replied saying the complaint was not directed against his office and said he had explained the insured's position to the carrier. The carrier responded to the insurance department by claiming the delay was Biller's fault, basically he did not follow through in presenting invoices and due to the delay the time period for the withheld depreciation had expired.
The examiner's notes contained in the file indicate he talked with the insurer who "agreed" that the insured should not be faulted for Biller's failure to follow through with the claim. The insurer did pay additional monies to the insured. The file was closed on November 21, 2006 with respect to Biller and there are notations saying "reason . . . Unfair claims practice: sub-reason . . . claim procedure," then it says statute, referring to § 38a-816(b)(d) and for disposition says additional money received "conclusion; Justified; statute/PA: § 538a-815." It is noted Biller did not make a written request for a hearing of the examiner's decision nor appealed the decision to Court pursuant to § 4-183.
The Defendant argues that "this complaint is irrelevant"; it involves a different issue — whether a claim for withheld depreciation was submitted within the 180-day time limit set forth in the policy, in light of the fact that the insured did receive additional monies, and also the claim was deemed justified not under § 38a-816(b) but under § 38a-815. In fact, Biller placed the insurer on notice of her withheld depreciation claim according to the file and a letter to the latter asserted the insurer did not act in good faith.
The Defendant's counsel also notes that Biller was not placed on notice of a complaint being filed nor was he given notice that any complaint was found to be justified. The file does not indicate that Biller was provided with a hearing prior to the "justified" finding.
(2) Exhibit 34
The Plaintiff notes that Ms. Bentley retained Biller Associates to act as her public adjuster after a May 10, 2007 fire loss. The complaint was filed against State Farm by Bentley in January 2008 for the company's refusal to renew her home insurance policy based on the substantial change in risk since the policy was issued because Ms. Bentley no longer lived on the premises. The complaint stated State Farm knew about the fire and paid Bentley for loss of rent and temporary housing.
The department informed the insurer and Biller about the complaint and Biller then told the department the complaint "legally" was not directed at him, he has nothing to do with renewal of policies. The policy was eventually reinstated; State Farm admitted to an oversight.
A Jerome Dunbar acted pursuant to a power of attorney. He informed the department he terminated Biller because Biller gave Bentley insurance company checks without the necessary endorsements, and did not respond to his or the insurance company's calls. Dunbar said the department told him Biller was not cooperating with his complaint. What all of this had to do with the original complaint is not made clear and the examiner's "notes" do not clarify anything. The Plaintiff does indicate that Biller did not ask to appeal the examiner's decision pursuant to 38a-19, nor appealed to the Court pursuant to § 4-183.
The file was closed and coded with respect to Biller under "Reason 70-Unfair claims practice; subsection claim delays." It notes the claim was settled then it says "Conclusion: Justified; statute; 38a-16." It is not explained how the latter section, which has to do with authorized investigations by the department, is related to a subsection (6) violation of § 38a-816. The file notes do say Biller did not cooperate with the insurance company, Bentley's attorney, or the department but the problem involved on the complaint has to do with inappropriate failure to renew a policy not with any of the specifications of unfair settlement practices. This is true even if the file, as it meandered along, then addressed allegations that certain checks were not delivered to Bentley because of Biller's actions or failure to act.
(3)Exhibit 35:
A tavern in Guilford suffered a fire loss on February 25, 2006. A Ms. Hunt who was the owner of the business, filed a complaint with the insurance department on December 13, 2006. Information was given to an insurance adjuster regarding the loss but Hunt could not contact him. Biller was hired in April 2006, information was given to Biller, but Hunt claimed she could never reach Biller and her calls were never returned. Various partial payments were made to her. Biller blamed the insurance adjustor for the delays in payment of the claim. The examiner said Biller did little for his client, the owner said Biller did not tell her the status of the claim and she was never advised to get estimates. There was "poor claim handling." The file was closed in August 2006 and found unfair claim settlement practice as regards to Biller pursuant to § 38a-816(b)(d). The claim was noted as settled. No hearing on the examiner's decision was made pursuant to § 38a-19 and no § 4-183 appeal was taken to Superior Court.
The Defendant notes that no enforcement action was taken. Biller claims Hunt was not a client or an insured, but the client was an entity known as Heller Brothers. Heller Brothers it is claimed wrote a letter to the department indicating it was satisfied with Biller's services. In any event, the Defendant notes there is no indication Biller was ever put on notice concerning the findings and there is no indication that a hearing was conducted by the department in connection with the complaint.
(4) Exhibit 36:
According to the Plaintiff this file reflects that a Dr. Marcus retained Biller after water damage to his home on September 26, 2006. In October 2007 Marcus filed a complaint with his carrier to the effect that his insurance company engaged in bad faith delay and did not reimburse him for his loss. A department examiner advised Biller on November 7, 2007 that the delays in the case were "horrendous." The examiner criticized Biller for not meeting at the loss site with the proper materials to settle the matter and stated Biller should lower his fee and move to resolve the matter "immediately." Biller denied that he did not follow up on the matter and stated Marcus missed a meeting with the insurance adjuster and Biller. He stated the examiner was interfering with his contract with Marcus, and requested a hearing on November 27, 2007. Marcus fired Biller November 29th for not living up to his contractual commitments. Biller denied this and wrote to Marcus that the letter was just trying to "cheat" him out of his fee. Biller again wrote to the examiner saying he had soured his relationship with his client and asked that examiner's comments regarding his efforts and fee be rescinded.
Marcus settled the claim himself and worked out a slightly different agreement than what was offered to Biller according to a December 12, 2007 letter to the examiner. He also reiterated what he believed Biller had failed to do. He was not informed of this progress of his claim. One call out of three or five were returned. He was not told of Biller's negotiations position with the insurance company despite request for this information.
The file was closed November 28, 2008 as to Biller and indicated unfair claims practice, corrective action, "Conclusion; Justified . . .' § 38a-816(6)(b). It notes the request for a hearing was "untimely" per § 38a-19 "as no decision was reached by the examiner at that time." In any event the actual "decision" of the examiner was not appealed to Superior Court pursuant to § 4-183.
The Defendant notes that the complaint was made only against the insurance company and in fact Biller's office forwarded the complaint to the insurance department. It is also noted that Biller sent a four-page response to the department listing file activity. The initial request for a hearing was denied and there was no response to a November 27, 2007 request for a hearing. On January 18, 2008 Biller wrote the department that the matter had been resolved and his fee had been paid. It is further claimed that Biller was never placed on notice of the department's conclusions as to any complaint being justified. The file indicates "corrective" action was taken but Mr. Russell of the insurance department, testified this would not constitute enforcement action.
(5) Exhibit 37:
The Malangones suffered a fire loss on April 2, 2006 and retained Biller to act as their public adjuster. They filed a complaint against Biller in April 2007. It was claimed Biller did not perform the services he was hired to do; he did not pursue with the insurance company amounts for repair the Malangones felt they were entitled to receive. Biller was sent a copy of the complaint in April 2007.
Biller said he tried to meet with the client but she refused to do so; he also said in May 2007 that he was in contact with the adjustor.
The Plaintiff notes the examiner wrote Biller May 30, 2007 stating he failed to provide the necessary assistance to settle the claim and exhibited a lack of diligence all in violation of the Connecticut General Statutes, but without identifying which one.
Biller denied the accusations and said he was troubled the examiner reached his conclusions without giving Biller an opportunity to be heard. He then requested a formal hearing and asks what assistance he failed to provide. The Plaintiff notes Ms. Malangone called the department to say she resolved the matter herself. The file was "coded with respect to Biller" generically referring to an unfair claims practice, the complaint was said to be justified under § 38a-816(6)(b). The Plaintiff says that although a request by Biller for a hearing was "apparently" denied, but he made no effort to appeal under § 4-183.
The Defendant notes that the primary issue of the complaint was whether the withheld Depreciation was submitted within 180 days per a policy provision. The lack of diligence conclusion was based solely on hearsay communications with the insured and the insurance company. No enforcement action was taken by the department.
(6) Exhibit 38:
Patricia Joyner retained Biller after she suffered a fire loss on January 16, 2006, according to the plaintiff, in her complaint to the department Joyner stated repairs had not started on her home for months after the fire and Biller told her the insurance company did not return his calls. She also got a non-renewal notice from the insurer.
Biller said Joyner assured him her complaint was against the insurer not him but Joyner wrote the department August 26, 2006 saying Biller did not follow up on the claim with the insurance company and wanted her to contact the company. The department examiner wrote Biller saying Joyner had retained a lawyer who was able to settle the matter with the insurance company. He concluded Biller had poorly represented his client's needs.
Biller responded that the examiner had not investigated the matter and Joyner's lawyer had done nothing to achieve the settlement; it was achieved through his efforts. Biller on August 25, 2006 requested a formal hearing but was told several days later no such hearings would be scheduled. The file was closed November 15, 2006 with the claim reported as being settled but the complaint was still deemed "justified" under § 38a-816(6)(b). No appeal was taken pursuant to § 4-183.
(7) Exhibit 39:
Mr. Luca suffered a fire loss in February 2007 and hired Biller to be his public adjuster. The Plaintiff notes Luca did complain about Biller's services arguably, in March 2008 and clearly, in a July 2008 letter to the department.
The insurance company responded to the complaint by saying Biller had not sent it certain material. The department according to the plaintiff's reading of the file made two requests for documentation from Biller, which he never complied with.
In his July 7, 2008 letter Luca said Biller was delaying in turning monies over to him although some checks had been delivered to him. Biller responded by saying mold remediation and living expense payments were outstanding; by August 21, 2008 all payments had been made.
The examiner's notes state "there appears to be a delay on the part of the (public adjuster) in the settlement loss. There was a delay in reporting the mold loss as well as providing documentation."
The file was closed in October 2008. It was reported that the claim was settled and it was concluded that the complaint as to Biller was justified under § 38a-816(6)(f). The Plaintiff notes no hearing request was made pursuant to § 38a-19 and no appeal was filed under § 4-183.
Biller on December 8, 2008, requested a statement signed by the insured be placed in the file wherein it stated they had no claim against him. Biller stated "the (department's) records are causing me tremendous hardship and potentially financial loss."
The Plaintiff notes no enforcement action was taken in the file and Biller and his office wrote the department to the effect that they were unaware the complaint had been coded as justified. The Plaintiff questions the basis on which the examiner reached his conclusion based just on one e-mail submitted by Luca and that it took 18 months to settle this matter.
(4)
The Court will confine its present discussion to the seven exhibits just discussed and offered as complaints establishing a general business practice. First, it should be noted that the fact that some of or all of these exhibits should come into evidence does not decide whether that being so they will establish the committing of violations of subsection (6) of § 38a-816 "with such frequency as to indicate a general business practice." These are two separate questions.
(a)
As indicated paragraph 42 of the complaint paraphrases subsection (6)(a) of the statute claiming Biller misrepresented pertinent facts or provisions of the policy relating to coverage. None of the exhibits marked for identification have anything to do with complaints raising such concerns by other insureds who were clients of Biller, so they cannot meet the test of relevancy on the general business practice necessary to establish a violation of this subsection of section (6) of § 38a-816.
Also paragraph 45 of the complaint refers to subsection (g) of § 38a-816(6) which involves unfair claims practices which compel an insurer to "institute litigation." None of the exhibits for identification establish an unfair claims practice that forced such an action so they do not establish any proof of a general business practice with regards to this paragraph of the complaint and its allegations. The Court will now examine the exhibits to determine whether they have some bearing on the relevancy issue of proving a general business practice as to the other allegations of the complaint.
Exhibit 33 for identification may have initially in whole or in part been directed against the insurance company but the examiner's file did refer to the insurer's claim that the problems arose because of Biller's failure to properly investigate the claim by not presenting invoices and his delay regarding a claim for withheld depreciation. A § 38a-816(6)(d) problem as regards Biller was found by the examiner and the complaint was said to be justified under § 38a-815. But that section broadly says no person (including presumably public adjustors) shall engage in any "trade practice which is determined to be an unfair or deceptive practice in the business of insurance." Subsection (6) of § 38a-816 and its listing of unfair claims practices by definition falls within the penumbra of unfair or deceptive practices.
Exhibit 34 for identification presents problems of its own. The complaint filed by the insured alleged that the insurer inappropriately failed to renew the policy. This has nothing to do with failures to act within the confines of subsection (6) which obviously involves "unfair claim settlement practices." In the actual complaint filed, a person holding power of attorney told the department Biller was fired because he did not deliver checks to the insured with proper endorsements. All of this would not appear to have anything to do with the particular allegations of the complaint alleging violation of subsections (a), (b), (f), and (g) of subsection (6). The department examiner concluded as to Biller that there was "unfair claims practice" without further explanation or specification of particular subsection violations of section (6). Section 38a-16 of the General Statutes is mentioned, but that has to do with failure to cooperate with an investigation by the insurance commission concerning his or her regulatory responsibilities under Title 38a. None of the actions of the department in this complaint appear to have had anything to do with investigation of unfair claims practices by either the insurer or Biller.
Exhibit 35 for identification, if it was otherwise admissible, does have to do with allegations regarding subsections (f) and (g) of subsection (6) of § 38a-816. Exhibit 36 for identification does raise issues under subsection (b) regarding Biller and the fact that it initially and technically was filed against the insurance company should not bar, standing alone, consideration of other allegations against a public adjuster referred to by complainant insured.
Section 38a-816(6) is an ameliorative statute and needs to be broadly interpreted, especially in a case such as here, where the public adjuster is informed by the original complaint or even soon thereafter of allegations regarding alleged unfair claims practices.
Exhibit 37 for identification does present allegations against Biller that fall within subsection (b) but does raise issues regarding the hearsay basis of the examiner's findings, which the Court will discuss shortly.
Exhibit 38 for identification does raise subsection (b) issues as the examiner in fact found with respect to this complaint and exhibit 37 for identification. Exhibit 39, for identification, at least according to the allegations, presents, as the examiner found, a claimed violation of § 38a-816(6)(f).
Thus six of the seven exhibits offered for identification have some relevance in proving a general business practice, or better put, are examples thereof. But that is only the beginning of the problem and does not establish that they be introduced into evidence.
(5) (a)
An obvious problem presents itself as to the admissibility of these complaints. The factual allegations regarding Biller's conduct are based on acts or failures to act occurring between November 2002 and the end of March 2003.
Exhibit 33, suggest Biller was hired in 2003, but no complaint was filed until 2006. Exhibit 35 indicates Biller was hired in April 2006, so his alleged failures to act took place some three years after the events in this case. Exhibits 36, 38 and 39 involve allegations occurring some four years after the events alleged in this case In exhibit 37 for i.d. the complaint was filed against Biller in August 2007, the loss happened in April 2006 and Biller was retained sometime after the loss. Exhibit 39 involves a complaint about Biller's services made in March 2008; the loss occurred in February 2007; the complaint concerning Biller relates to actions or failures to act that took place some four years or more after the events alleged in this case.
The question becomes can evidence of complaints subsequent to the events alleged in a particular complaint be used to establish a general business practice. Generally speaking the "general business practice" provision in our state and other states adopting the unfair claims settlement practices act equate that requirement with business custom and usage and to examine the particular problem now, before the Court — relevancy of post-complaint actions to prove a past general business practice — it is helpful to examine cases dealing with the issue as it arises generally in cases where habit, custom, usage, or business policy is sought to be shown. In fact, Couch On Insurance 3d at § 204:52 equates proof of general business practice in these unfair claims settlement practices cases with proof of "habit, custom, usage or business policy of the insured," pp 204 — 75-204-76.
Wigmore on evidence at § 382 in volume II indicates that the prior or subsequent existence of a quality or condition is evidential of its existence at a given time. This principle is equally applicable in evidencing a habit or cause of conduct. Wigmore goes on to say that "such evidence is receivable to show the mode of conducting a business." See also Gaslowwski v. Huse, 897 P.2d 678m 682 (Ariz, 1994). The Court could find no Connecticut cases directly on point, but the Wigmore supplement gathers cases on habit and business usage discussed in § 382 and refers to Potter v. Chicago Pnumatic Tool Co., 241 Conn. 199, 266 (1997), which at least places a time limit on such evidence. There the Court held that it abused its discretion in allowing into evidence video tapes of a factories operations made in 1992 as relevant to the company's practices between 1976 to 1987, some 5 to 16 years before.
Here the complaints are in the range of four, five or six years after the actions alleged in this complaint. That does not necessarily preclude their admission into evidence. However, this factor raises several questions as to the weight the Court should give these complaints if they were otherwise admissible in proving a general business practice.
(b)
A central problem related to the admission of these complaints turns on their hearsay nature. In Marshall v. Kleinman, 186 Conn. 67, 72 (1982) the Court said: "Evidence admitted without objection remains evidence in the case subject to any informities due to any inherent weakness. The trier may not, however, rely on hearsay evidence which is lacking in rational probative force." In other words, hearsay evidence admitted without objection may have some relevance to the issues in the case, but the basis of that observation is whether such evidence came in without objection. If there is an objection based on grounds other than relevance, then even the relevancy issue is not reached if the objection to its reception is sustained.
(i)
The contents of these exhibits, offered as prior complaints to establish a general business practice, are based on hearsay communications from the insured who retained Biller or their representatives.
The Defendant in part raises due process objections to their admissibility. Perhaps that is going too far. But insofar as rank hearsay is allowed into evidence without the opportunity to cross examine or otherwise contest its basis, questions of fundamental fairness are raised which in the context of this case is a component of a due process analysis.
In any event, how does the evidence come into the case?
There are no apparent admissions by Biller within the body of any of the complaints. He denies the allegations made or argues that at least some of the complaints were not made against him. State v. Woodson, 227 Conn. 1, 15 (1993) refers to 4 Wigmore, evidence 1972 rev. § 1048 page 2 in its discussion of admissions. On page 3 Wigmore says . . ."in effect, and broadly, anything said by the party opponent may be used against him as an admission, provided it exhibits the quality of inconsistency with the facts now asserted by him in pleadings or testimony."
It is true that "when a party's conduct indicates that the party assents to or adopts a statement made by another person the statement is admissible against the party," Tait's Handbook of Connecticut Evidence Tait, Prescott, § 8.16.6(a), page 492. And regarding some of these complaints Biller did not request a formal hearing and did not appeal any "decisions" by the examiner adverse to him under § 4-183 which found violations of § 38a-816(6). But this can hardly be defined as an adoptive admission. If we equate all this with silence, as Tait notes in subsection (b) of the foregoing section "silence as an inference of consent is admissible only when no other explanation is equally consistent with silence." Apparently in one or more of the complaints Biller might not have gotten notice of the examiner's decision. Formal hearings were requested as to least one complaint. And despite the failure to appeal to Superior Court § 4-183 each complaint is replete with objections and observations by Mr. Biller which deny any violation of § 38a-816(6). Furthermore no enforcement action was taken as the result of findings by the examiner. It would certainly border on a due process violation if a party in Biller's position had to go through the time and expense of a formal hearing or an appeal to Superior Court in order to avoid complaints rife with hearsay being introduced into evidence against him in an unrelated hearing occurring at some time in the future — especially where it is obvious that in the complaints and their attached files he articulated his objections to a disagreement with the complaints. The admission exception to hearsay does not apply.
(ii)
The other possible theory to admit these complaints can possibly be based on some notion of collateral estoppel.
Regarding collateral estoppel, in Lyons v. Jones, 291 Conn. 384, 400 (2009) the Court said, quoting from another case "Collateral estoppel or issue preclusion, is that aspect of res judicata which prohibits the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties on a different claim."
This is the general law as reflected in 47 Am.Jur.2d "Judgment" 464, 493 where it also notes the doctrine applies to "parties and their privies," also see Carothers v. Capozziello, 215 Conn. 82, 94-95 (1990).
The prerequisites for the application of collateral estoppel are nicely summed up in a federal case, In the Matter of Lombard, 739 F.2d 499, 502 (10 Cir. 1984), where the Court said:
The doctrine of collateral estoppel precludes relitigation of issues actually and necessarily decided in a prior action . . . It can only be applied to subsequent actions when (1) the issue previously decided is identical with the one presented in the action in question, (2) the prior action has been adjudicated on the merits, (3) the party against whom the doctrine is invoked was a party or in privity with a party to the prior adjudication, and (4) the party against whom the doctrine is raised had a full and fair opportunity to litigate the issue in the prior action.
This reflects our law as noted in Carothers v. Capozziello, supra. Lafayette v. General Dynamics Corp., 255 Conn. 762, 773 (2001), Crochiere v. Board of Education, 227 Conn. 333, 342-43 (1993).
For collateral estoppel to apply there must be an identity of parties — identity between the parties in the present litigation and those involved in prior administrative proceedings. Of course, res judicata and collateral estoppel can be given to administrative adjudications, Carothers v. Capozziello, supra, but any findings by an insurance department examiner on a complaint or application regarding Biller by another party not in privity with the present plaintiff, cf. New England Rehabilitation Hospital of Hartford, Inc v. CHHC, 226 Conn. 105, 130 (1993), can hardly meet the party or privity requirement.
Also, any argument to introduce these complaints could not be made under res judicata (claim preclusion) but must be made under collateral estoppel (issue preclusion — i.e. the finding of unfair claims settlement practices). But unlike res judicata, where collateral estoppel is at issue, an opportunity to litigate perhaps not taken advantage of will not do — there must have been actual litigation, see Lafayette v. General Dynamics, 255 Conn. 762, 770 (2001). That did not occur here with regards to any of these complaints.
(iii)
It is also true that the general language in cases from other jurisdictions seem to contemplate that a general business practice under these unfair claims settlement statutes require evidence beyond that of paper complaints not subject to cross examination.
In Jenkins v. J.C. Penny Cas. Ins. Co., 280 SE 2d 252, 260 (W.Va., 1981) the Court said:
We conceive that proof of several breaches by an insurance company of W.Va. code, 33-11-4(9), would be sufficient to establish the indication of a general business practice. It is possible that multiple violations of W.Va. Code, 33-11-4(9), occurring in the same claim would be sufficient, since the term "frequency" in the statute must relate not only to repetition of the same violation but to the occurrence of different violations. Proof of other violations by the same insurance company to establish the frequency issue can be obtained from other claimants and attorneys who have dealt with such company and its claims agents, or from any person who is familiar with the company's general business practice in regard to claim settlement. Such information is, of course, subject to discovery, and it appears that the Legislature intended under W.Va. code, 33-11-4(10), to require insurance companies to maintain records on complaints filed against it.
(Emphasis by this Court)
The Jenkins language was referred to with approval in Klaudt v. Flink, 658 P2d 1065, 1068 (Mont., 1983); also see State ex rel. Nationwide v. Marks, (W.Va 3-27-209, Supreme Court of Appeals) at page 11; cf. Colonial Life Accident Ins. Co v. Superior Court, 31 Cal.3d 785, 791 (1982) and recent West Virginia case of Jackson v. State Farm Auto Ins. Co., 600 S.E.2d 346, 357-58 (2004). But see Hubbell v. Trans World Life Ins. Co., 50 NY.2d 899, 9201 (1980) which indicates a complaint can be introduced to show general business practice but does not explain its position or the factual basis on which it was based.
In any event, for the foregoing reasons the Court cannot mark as full exhibits the previously discussed exhibits marked for identification.
The Plaintiff also seeks to introduce into evidence four other complaints, which it is claimed have been circumstantially authenticated. Exhibit 27 for identification. This is nothing but raw hearsay communications complaining about Biller's actions and failures to act after Biller Associates was hired as a public adjuster following fire damage to the home of a Mr. Park. There are no attached findings or decisions of the Insurance Department, just a letter to Mr. Biller requesting his assistance regarding the complaint.
In any event authentication only means that it has been shown a document is what it is claimed to be, see; 9-1 of Code of Evidence. But the general law is that:
Although a document must generally be authenticated to be admissible in evidence, its mere authentication does not invariably mean that it is admissible; the document must meet generally applicable standards of relevance to be admissible. Its admissibility may be barred by an applicable rule of privilege notwithstanding its authenticity. The document may be hearsay, in which case, if the document is to be offered for the purpose of showing the truth of the assertions made in it, its proponent must, to secure its admission, establish that it comes within an exception to the hearsay rule. Similarly, an objection to a document based on the "best evidence" rule cannot be overcome merely by evidence of its authenticity." 29 Am.Jur.2d, "Evidence"; 1048, page 389.Exhibit 28 for identification carries with it the same problems to admissibility and should not be marked as an admissible exhibit. The same observations are appropriate for Exhibit 29 (Nammie Letter); as to this proffered exhibit there is not even a communication from the Insurance Department to Biller or anyone else.
Exhibit 30 should not be marked as a full exhibit. A letter from the Insurance Department submitted by an unidentifled party but which the Court will assume is an examiner, does not make a finding of any violation by Biller of § 38a-816(6) and merely repeats hearsay comments by a claim management company. Acting outside the scope of activities permitted by § 38a-723, as the plaintiff argues is suggested by this exhibit, even if it were admissible, does not set forth an unfair claims settlement practice. Any "admissions" to this effect that be garnered by correspondence from Biller's lawyer is thus not relevant, see State v. Stepney, 191 Conn. 233, 251 (1983), State v. Woodson, 277 Conn. 1, 15 (1993).