Opinion
AANCV166020142S
08-30-2017
CLS Investments, Inc. v. Stone Transportation Agency, LLC
UNPUBLISHED OPINION
MEMORANDUM OF DECISION ON THE DEFENDANT'S MOTION TO STRIKE
Barry K. Stevens, J.
STATEMENT OF THE CASE
The plaintiffs in this action are CLS Investments, Inc. and Serlin Transportation, LLC. The defendants are Stone Transportation Agency, LLC, and Certain Underwriters at Lloyds (" Lloyds of London"). The operative complaint is the second amended substitute complaint dated February 17, 2017. This complaint asserts the following facts as to Stone Transportation Agency. Prior to July 23, 2013, the plaintiffs entered into an agreement with Stone to serve as their insurance broker and obtain liability insurance for the plaintiffs regarding their property located at 569 Commerce Drive, Fairfield, Connecticut. Pursuant to this contract, Stone obtained an insurance policy with Lloyds of London.
The motion to strike before the court was filed by Stone Transportation Agency, and therefore, references will be made hereafter to Stone as the defendant.
On July 7, 2015, a lawsuit was instituted by Susan Dell'Orso against the plaintiffs alleging that because of the plaintiffs' negligence, she fell on the plaintiffs' property and suffered damages. In response to this lawsuit, Lloyds of London refused to defend and indemnify the plaintiffs under the insurance policy obtained through Stone because they " were not named by [Stone] as insured[s] under [the] policy . . ." Amended Sub. Compl., First Count ¶ 8. As a result, the plaintiffs have or will suffer the following damages: " payment for a non-applicable policy, the cost of [their] defense in the claims arising from the alleged fall down, potential future liability for damages in that lawsuit, the costs of pursing this claim and consequential damages related thereto." Amended Sub. Compl., First Count ¶ 9. The complaint contains five counts against Stone asserting the following claims: malpractice, negligence, breach of contract, violation of the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § § 38a-816(1)(A), 38a-816(1)(F), 38a-816(8), and violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a.
Pending before the court is Stone's motion to strike all counts of the complaint. The motion was filed with a supporting memorandum on March 9, 2017. The plaintiffs objected to the motion on April 27, 2017, and the defendant filed a reply on May 11, 2017. The court heard oral argument on the motion and the objection on May 22, 2017. For the following reasons, the motion to strike is granted as to counts one, two, four, and five, and denied as to count three.
DISCUSSION
I
" A motion to strike attacks the legal sufficiency of the allegations in a pleading . . . In reviewing the sufficiency of the allegations in a complaint, courts are to assume the truth of the facts pleaded therein and to determine whether those facts establish a valid cause of action." (Internal quotation marks omitted.) Kortner v. Martise, 312 Conn, 1, 48-49, 91 A.3d 412 (2014). " The role of the trial court in ruling on a motion to strike is to examine the [complaint], construed in favor of the [plaintiff], to determine whether the [plaintiff has] stated a legally sufficient cause of action." (Internal quotation marks omitted.) Coe v. Board of Education, 301 Conn, 112, 117 19 A.3d 640 (2011). " [W]hether the plaintiff alleged the facts required . . . must be determined with due regard to the principle that the facts necessarily implied by the allegations in a complaint are sufficiently pleaded, and hence need not expressly be alleged." Bouchard v. People's Bank, 219 Conn. 465, 471, 594 A.2d 1 (1991). " In ruling on a motion to strike, the court is limited to the facts alleged in the complaint." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn, 576, 580, 693 A.2d 293 (1997). Similarly, " the trial court is limited to considering the grounds specified in the motion." Meredith v. Police Commission, 182 Conn. 138, 140, 438 A.2d 27 (1980).
II
The first count of the complaint alleges that the defendant committed " malpractice" by its " failure to adhere to the standard of care for insurance brokers in that [it] failed to obtain liability coverage that provided indemnification and a defense [covering] the plaintiffs." Amended Sub. Compl., First Count ¶ 10. The second count alleges that the plaintiffs' losses were caused by the " negligence and carelessness of the defendant Stone in that it failed to obtain liability coverage for plaintiffs." Amended Sub. Compl., Second Count ¶ 10.
The defendant moves to strike the first and second counts based on the economic loss doctrine. " The economic loss doctrine is a judicially created principle which prohibits recovery in tort when the claim only seeks to recover economic losses and arises from a contract between the parties." (Footnote omitted.) Ulbrich v. Groth, Superior Court, judicial district of Waterbury, Complex Litigation Docket, Docket No. X06-CV-08-4016022-S (October 26, 2010, Stevens, J.) (50 Conn.L.Rptr. 822, 824, ), aff'd in part, 310 Conn. 375, 78 A.3d 76 (2013).
The court notes that the plaintiffs insist that they can seek recovery under counts one through three simultaneously and they are not pleading alternatively. As an additional ground to strike count two, the defendant contends that this count, which is based on simple negligence, is duplicative of the first count alleging professional malpractice. The court declines to reach this argument in light of the court's conclusion that both these counts should be stricken under the economic loss doctrine.
There is no dispute that the plaintiffs' malpractice and negligence counts assert tort claims that arise from an alleged contract between the parties and that the plaintiffs only seek economic damages. Nevertheless, the plaintiffs argue that these counts should not be stricken under the economic loss doctrine on the ground that this doctrine is inapplicable when a plaintiff is induced into a contract by negligent misrepresentations. The economic loss doctrine is inapplicable in such a situation because when a plaintiff is induced into a contract by negligent misrepresentations, the plaintiff's misrepresentation claim against the defendant neither depends on, nor emanates from the parties' contractual relationship. See Ulbrich v. Groth, supra, 310 Conn. at 403-05. The problem with the plaintiffs' argument is that counts one and two do not assert a negligent misrepresentation cause of action separate from their contract claim. Rather, they allege professional malpractice and simple negligence respectively based on the contract claim. Therefore, the first and second counts of the complaint should be stricken.
The defendant also moves to strike count three of the complaint asserting a claim for breach of contract. Paragraph four of the first count of the complaint, which is incorporated into all the counts of the complaint against Stone, alleges that the plaintiffs entered into an agreement with the defendant to " obtain general liability insurance for plaintiffs and that included claims for personal injuries due to alleged negligence in the maintenance of the property at 569 Commerce Drive, Fairfield, Connecticut and would provide both a defense and indemnification therefore." Paragraph ten of count three further alleges that the losses suffered by the plaintiffs were " caused by a result of [the defendant] Stone's breach of its agreement to obtain liability coverage for plaintiffs." The defendant moves to strike count three on the ground that this count merely asserts a professional malpractice claim and fails to assert properly a separate breach of contract claim.
" While Connecticut recognizes a cause of action against an insurance agent for failure to obtain insurance under a theory of either professional malpractice or breach of contract . . . an allegation of professional malpractice . . . does not generally give rise to a breach of contract claim." (Citation omitted.) Berlin Corp. v. Continental Casualty Co., Superior Court, judicial district of Hartford, Docket No. CV-06-4021653-S (November 2, 2006, Wiese, J.) (42 Conn.L.Rptr. 358, 361, ). " When determining whether a complaint sets forth an independent breach of contract claim or merely dresses a malpractice claim in contract language, the court examines the pleadings to ascertain whether the breach of contract alleged is based on substandard . . . care or exists irrespective of adherence to or deviation from the standard of care." (Internal quotation marks omitted.) Id. " Professional [m]alpractice is commonly defined as the failure of one rendering professional services . . . to exercise that degree of skill and learning commonly applied under all the circumstances in the community by the average prudent reputable member of the profession with the result of injury, loss, or damage to the recipient of those services . . . A breach of contract claim is a distinct claim that may arise from the same facts and may exist where the . . . [parties] contract for a specific result ." (Citation omitted; emphasis in original; internal quotation marks omitted.) Id.
" When bringing a claim against an insurance agent for failure to obtain insurance under a breach of contract theory, a plaintiff must allege that he contracted with the insurance agent to obtain a particular result . . . If the allegations are couched in terms of the defendant having committed professional negligence in the procuring of the insurance policy, instead of allegations that the defendant promised the plaintiff a specific result in obtaining the insurance, the claim for breach of contract should be stricken." (Citation omitted; internal quotation marks omitted.) O& G Industries, Inc. v. Litchfield Ins. Group, Inc., Superior Court, judicial district of Litchfield, Docket No. CV-12-6006448-S, (July 1, 2013, Pickard, J.); accord, DeCrescenzo v. CPM Ins. Services, Inc., Superior Court, judicial district of New Haven, Docket No. CV-07-5010892-S (December 19, 2007, Cosgrove, J.) [44 Conn.L.Rptr. 679, ]; Savoy Linen Services, Inc. v. USI Ins. Services of Connecticut, Inc., Superior Court, judicial district of Fairfield, Docket No. CV-01-5017161-S, (February 9, 2010, Tyma, J.), On the other hand, the court in Erikson Metals Corp, v. McManus, Superior Court, judicial district of New Haven, Docket No. CV-07-5002467-S, (March 27, 2008, Gilligan, J.) denied the defendant's motion to strike a breach of contract claims because the complaint alleged that the plaintiff contracted for a-particular result, namely, for the defendant to procure insurance having the same insurance coverages the plaintiff had before retaining the defendant.
Specifically, the court held that a breach of contract claim was sufficiently asserted when the complaint alleged that the plaintiff gave the insurance agent copies of the insurance contract in effect prior to retaining the agent and requested the same coverage.
In the present case, reading the allegations of the complaint broadly in favor of the plaintiffs as required on a motion to strike, the complaint alleges sufficiently that the parties entered into an agreement to obtain a particular result, namely for Stone to obtain liability insurance for the plaintiffs that " included claims for personal injuries due to alleged negligence in the maintenance of the property at 569 Commerce Drive, Fairfield, Connecticut and [that] would provide both a defense and indemnification . . ." Amended Sub. Compl., Second Count ¶ 4. The complaint further alleges that the plaintiffs paid for a policy to contain such coverage, and the defendant procured a policy to provide such coverage, but this policy failed to provide the coverage as the parties agreed causing the plaintiffs to suffer loss. These allegations are sufficient to state the elements for a breach of contract and the motion to strike the third count should be denied.
IV
The defendant next moves to strike count four of the complaint alleging a violation of CUIPA. The law is now too well established for dispute that such claim merely alleging that a defendant violated CUIPA fails to state a claim upon which relief may be granted because CUIPA itself does not provide a private right of action. See Artie's Auto Body, Inc., v. Hartford Fire Ins. Co., 317 Conn. 602, 623, 119 A.3d 1139 (2015) (" CUIPA, which specifically prohibits unfair business practices in the insurance industry and defines what constitutes such practices in that industry . . . does not authorize a private right of action but, instead, empowers the commissioner to enforce its provisions through administrative action" [citation omitted)). Therefore, as a matter of law, the fourth count of the complaint fails and must be stricken.
V
In count five of the complaint, the plaintiffs restate the allegations of their CUIPA claim and allege that the defendant violated CUTPA. Although CUIPA itself does not provide a private right of action, our Supreme Court has 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." Nazami v. Patrons Mutual Ins. Co., 280 Conn. 619, 625, 910 A.2d 209 (2006).
In support of its CUTPA claim, the plaintiff alleges the following. The defendant " made representations about the benefits, conditions and terms of [the] insurance policy . . . including . . . the inclusion of plaintiffs as insured and that it would provide plaintiffs with a defense and indemnification of claims against them." Amended Sub. Compl., Fifth Count ¶ 12. These misrepresentations were made by the defendant to induce the purchase of the insurance policy, and the defendant was compensated for its work in selling the policy. Based on these allegations, the plaintiffs claim that the defendant violated § § 38a-816(1)(A), 38a-816(1)(F), and 38a-816(8) of CUIPA. The defendant contends that the plaintiffs' allegations are insufficient to state claims under any of these provisions of CUIPA. The court agrees.
A
Section 38a-816(1) provides that an unfair and deceptive act in the business of insurance includes " [Making, issuing or circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement, sales presentation, omission or comparison which: (A) Misrepresents the benefits, advantages, conditions or terms of any insurance policy."
In evaluating whether a plaintiff has sufficiently alleged misrepresentations within the meaning of Section 38a-816(1)(A), our Supreme Court in Nazami v. Patrons Mutual Ins. Co., supra, 280 Conn. 626, relied on the traditional elements of an action for negligent misrepresentation, which require a plaintiff to establish " (1) that the defendant made a misrepresentation of fact (2) that the defendant knew or should have known was false, and, (3) that the plaintiff reasonably relied on the misrepresentation, and (4) suffered pecuniary harm as a result." The plaintiffs' allegations fail to assert all the elements of a negligent misrepresentation claim. Specifically, the complaint alleges that the plaintiff suffered monetary loss as a result of misrepresentations made by the defendant, but the complaint does not allege that the defendant knew or should have known that the representations were false or that the plaintiff reasonably relied on the misrepresentations.
B
Section 38a-816(1)(F) provides that an unfair and deceptive act in the business of insurance may also involve " a misrepresentation, including, but not limited to, an intentional misquote of a premium rate, for the purpose of inducing or tending to induce to the purchase, lapse, forfeiture, exchange, conversion or surrender of any insurance policy." Our Supreme Court in Heyman Associates No. 1 v. Ins. Co. of Pennsylvania, 231 Conn. 756, 795, 653 A.2d 122 (1995), explained that the plain language of § 38a-816(1)(F) " permits recovery only if ail insured establishes that its insurer made a purposeful misrepresentation. To show such a purposeful misrepresentation, an insured must necessarily produce evidence that the insurer acted intentionally." In the present case, the plaintiffs' complaint is devoid of any allegations that the defendant made the alleged misrepresentations intentionally, purposefully, or deliberately
C
Section 38a-816(8) provides that an unfair and deceptive act in the business of insurance includes " [m]aking false or fraudulent statements or representations on or relative to an application for an insurance policy for the purpose of obtaining a fee, commission, money or other benefit from any . . . individual." The defendant contends that a violation of § 38a-816(8) requires the plaintiff to prove that the alleged misrepresentation was made intentionally.
" Our appellate courts have not had the opportunity to interpret § 38a-816(8). Furthermore, decisions of the Superior Court interpreting § 38a-816(8) are limited. Those decisions that do address § 38a-816(8) have explicitly or implicitly allowed a party to maintain a cause of action predicated on § 38a-816(8) so long as the alleged false or fraudulent statement or representations were committed purposefully or intentionally." (Internal quotation marks omitted.) O& G Industries, Inc. v. Litchfield Ins. Group, Superior Court, judicial district of Litchfield, Docket No. CV-126006448-S (June 3, 2016, Pickard, J.) (62 Conn.L.Rptr. 471, 477-78, ), quoting Stamboulis v. Lewtan, Superior Court, judicial district of Hartford, Docket No. CV-11-6022984-S, (September 11, 2014, Wiese, J.); accord Hotak v. Barth Ins. Agency, Inc., Superior Court, judicial district of Ansonia-Milford, Docket No. CV-01-0075027-S (December 12, 2003, Nadeau, J.) (36 Conn.L.Rptr. 181, ). Again, as previously stated, the plaintiffs' complaint is devoid of any allegations that the defendant made any misrepresentations intentionally, purposefully, or deliberately.
CONCLUSION
Therefore, for these reasons, the motion to strike is denied as to count three of the second amended substitute complaint alleging breach of contract. The motion is granted as to the four counts of the complaint. The plaintiff may plead over within fifteen days. Practice Book § 10-44. The defendant shall plead further within thirty days thereafter. Practice Book § 10-8.
So ordered.