Opinion
FSTCV136017661S
08-08-2016
Lisbet Holt et al. v. Safeco Insurance Company of America
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
David R. Tobin, Judge
In their complaint filed on March 22, 2013, plaintiffs Lisbet Holt and Richard Holt allege that they are the owners of residential property located at 23 Ridgewood Road in Rowayton and that on June 26, 2011 the defendant issued an insurance policy insuring their property against various perils. The plaintiffs allege on February 28, 2011 that while the policy was in effect, their residential property was damaged by a falling tree. The plaintiffs allege that after receiving notice of the loss, the defendant: 1) failed to dispatch an adjuster in a timely manner; 2) engaged incompetent independent contractors to process and adjust the plaintiffs' claim; 3) failed to pay the plaintiffs' claim; 4) attempted to settle the plaintiffs' claim for a " low ball" amount; 4) failed to respond to or communicate with the public adjuster engaged by the plaintiffs; 5) failed to pay an appraisal award of $33, 777.87 after failing to appeal the award; 6) made the check sent to plaintiffs in settlement of their claim payable to a third-party mortgagee as well as the plaintiffs; and 7) the defendant is a member of a group of insurers which is insolvent due to claims resulting from " Irene" and " Sandy" which caused the defendant to engage in the conduct complained of.
The complaint does not allege facts explaining how an insurance policy issued in June 2011 could cover a loss occurring four months prior to the issuance of the policy. However, in considering the defendant's motion to strike, the court limits its review to the legal insufficiencies specifically addressed in that motion.
Count one of the complaint alleges that the defendant's conduct constitutes an unfair trade practice in violation of CUTPA. Count two alleges breach of contract. Count three alleges violation of the covenant of good faith and fair dealing and breach of fiduciary duty. Count four alleges negligence. Count five alleges fraud. Count six alleges emotional distress. Count seven claims loss of reputation. Count eight alleges interference with plaintiffs' economic activities. Count nine alleges interference with the plaintiffs' contract with their public adjuster, contractors, " agents and other parties." Count ten alleges collusion in insurance markets and price fixing. Count eleven alleges unfair insurance practices in violation of CUIPA. Count twelve alleges harassment of the plaintiffs by the defendant due to their engaging a public adjuster. Count thirteen alleges that the appraisal award of $33, 777.87 was issued to the plaintiffs.
On November 5, 2014, the defendant moved to strike counts one, five, seven, eight, nine, ten, eleven and twelve of the plaintiff's complaint (#118.00) on the following grounds.
1. Counts one and eleven alleging CUTPA and CUIPA violations fail to allege conduct constituting a general business practice.
2. Count five fails to identify a statement of fact upon which the plaintiffs relied, and is therefore legally insufficient.
3. Count seven alleging loss of reputation in the context of a breach of contract is not actionable in Connecticut.
4. The allegations of tortious interference with business opportunities (count eight) and tortious interference with contractural relations (count nine) fail to allege facts regarding damages sustained as the result of the alleged torts.
5. The claims of " market manipulations" and price fixing in count ten are within the responsibilities of the Connecticut Insurance Department, and therefore, do not provide a basis for a private cause of action.
6. The harassment claim alleged in count twelve is not recognized as a civil cause of action in Connecticut.
On December 22, 2014, the plaintiffs filed an objection to the motion to strike (#121.00) claiming that each of the counts at issue were sufficiently pled. The court heard the defendant's motion to strike and the plaintiffs' objection to that motion at short calendar on June 20, 2016. For reasons set forth below, the court grants the defendant's motion to strike on all counts.
DISCUSSION
" The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any [pleading] . . . 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). " A party wanting to contest the legal sufficiency of a special defense may do so by filing a motion to strike." Barasso v. Rear Still Hill Road, LLC, 64 Conn.App. 9, 13, 779 A.2d 198 (2001). In ruling on a motion to strike, the court must accept as true the facts alleged in the special defenses and construe them in the manner most favorable to sustaining their legal sufficiency. See Connecticut National Bank v. Douglas, 221 Conn. 530, 536, 606 A.2d 684 (1992). " [I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . It is fundamental that in determining the sufficiency of a complaint challenged by [an opposing party'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, 318, 907 A.2d 1188 (2006).
COUNTS ONE AND ELEVEN--ALLEGED CUTPA & CUIPA VIOLATIONS
The defendant moves to strike counts one and eleven alleging, respectively CUTPA and CUIPA violations on the grounds that those counts fail to allege a general business practice.
In the count one, the plaintiffs allege that " 32. Defendant's actions were taken in the conduct of trade or commerce in that it offers insurance to the public. 33. The Defendant's actions were willful, wanton and taken with reckless disregard for the Plaintiff's rights 34. As a direct and proximate result of the aforesaid unfair and deceptive acts and practices, the Plaintiffs may suffer a substantial loss of money and property. 35. The aforementioned acts of the Defendant constitutes unfair and deceptive acts or practices in the conduct of trade or commerce in violation of [CUTPA]."
In count eleven, the plaintiffs allege " 31. Count Eleven: the Defendant's actions constitute unfair claim settlement practices committed and preformed with such frequency as to indicate a general practices and not isolated events, under [CUIPA] . . . 33. The defendant failed to inspect damage timely, attempted at four occasions to settle for lower than the estimated claim, forced arbitration, attempt to sell for less than arbitration award, altered the plaintiff's policy, unreasonably refused to make final settlements, at several occasions refused to communicate for ten or more separate acts in violation of [CUIPA]. 34. Whether [CUIPA] allows private action by the plaintiffs, see subsection is unclear at present, however where a unison reason for action, a general pattern directed not just at the Plaintiff, but towards the public and the community as a whole, exists under [CUIPA], it is consistent with practice and common law for the plaintiff to pursue the actions here in the eleventh count. 35. The Defendant's actions were taken in the conduct of trade or commerce in that it offers insurance to the public. 36. The Defendant's actions were willful, wanton and taken with reckless disregard for the Plaintiff's rights. 37. As a direct and proximate result of the aforesaid actions, the Plaintiffs may suffer a substantial loss of money and property."
Under CUTPA, General Statutes § 42-110b(a) states: " No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." " In order to provide guidance for CUTPA's general proscription of unfair or deceptive acts or practices, [our Supreme Court] adopted the standard of FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 92 S.Ct. 898, 31 L.Ed.2d 170 (1972) . . . Under that standard, the federal trade commission looks to a number of factors in deciding whether an action or practice is unfair: (1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise--whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers . . ." (Citations omitted; internal quotation marks omitted.) Mead v. Burns, 199 Conn. 651, 664-65, 509 A.2d 11 (1986).
" The provisions of CUIPA which the plaintiff invoked . . . are § § 38-60 and 38-61(6)(d). CUIPA, in § 38-60, forbids any person engaged in the business of insurance in this state from engaging in any unfair method of competition or in any unfair or deceptive act or practice prohibited by sections 38-60 to 38-64, inclusive. The plaintiff does not maintain that § 38-60 by itself affords him a remedy, but relies instead on the § 38-61(6) prohibition of unfair claim settlement practices. Among the unfair claim settlement practices that the latter section proscribes are: [c]ommitting or performing with such frequency as to indicate a general business practice any of the following . . . (d) refusing to pay claims without conducting a reasonable investigation based upon all available information . . ." (Internal quotation marks omitted.) Id., 657.
" While the text of § 38-61(6)(d) could indubitably be clearer, we believe the fairer reading of the governing language is to construe the general business practice clause as a modifier of both 'performing' and 'committing.' A narrow construction of this provision is appropriate because CUIPA authorizes the imposition of criminal penalties for the commission of the conduct it proscribes." (Internal quotation marks omitted.) Id., 658. " Looking to the statute as a whole, we believe that claims of unfair settlement practices under CUIPA require a showing of more than a single act of insurance misconduct." Id., 659.
The Supreme Court has " expressly [held] that . . . insurance practices [can be] the subject of . . . CUIPA and CUTPA [and accordingly] . . . it is possible to state a cause of action under CUTPA for a violation of CUIPA . . ." Id., 663; see General Statutes § 38a-816(6). " [A] CUTPA claim based on the public policy embodied in CUIPA must be consistent with the regulatory principles established therein, and that the 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).
Section 38a-816(6) provides in relevant part: " The following are defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance: . . . Unfair claim settlement practices Committing or performing with such frequency as to indicate a general business practice any of a long list of practices, including (D) refusing to pay claims without conducting a reasonable investigation based upon all available information, (E) failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed, (F) not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear . . ."
" [A] claim under CUIPA predicated upon alleged unfair claim settlement practices in violation of § 38a-816(6) requires proof that the unfair settlement practices were committed or performed with such frequency as to indicate a general business practice." (Internal quotation marks omitted.) Id., 847-48. To this end, a " defendant's alleged improper conduct in the handling of a single insurance claim, without any evidence of misconduct by the defendant in the processing of any other claim, does not rise to the level of a 'general business practice' as required by § 38a-816(6)." Id., 849.
" [B]ecause a single failure to pay a valid insurance claim in violation of § 38a-816(6)(D) does not violate CUIPA, it does not violate CUTPA." State v. Acordia, Inc., 310 Conn. 1, 37, 73 A.3d 711 (2013). Thus, " if a plaintiff brings a claim pursuant to CUIPA alleging an unfair insurance practice, and the plaintiff further claims that the CUIPA violation constituted a CUTPA violation, the failure of the CUIPA claim is fatal to the CUTPA claim." Id., 31.
The factual allegations in both of these claims fail to sufficiently allege a general business practice, as required for a CUTPA claim, and fail to sufficiently allege a showing of more than one single act of insurance misconduct, as required for a CUIPA claim. Accordingly, the court grants the defendant's motion to strike counts one and eleven.
COUNT FIVE--FRAUD
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 . . . [T]he party to whom the false representation was made [must claim] to have relied on that representation and to have suffered harm as a result of the reliance." (Internal quotation marks omitted.) Simms v. Seaman, 308 Conn. 523, 548, 69 A.3d 880 (2013).
In responding to the defendant's motion to strike count five the plaintiff explain that the count was based on: " The Defendant willfully and intentionally attempted to have the Plaintiffs accept a check for a far lower settlement that the Defendant knew the repairs would cost. The Defendant's adjustors use the same estimating system that the Plaintiffs' public adjuster did, see 1.90. The Defendant kept sending checks for lower amounts, slightly increasing the amount to get the Plaintiffs to " bite, " see 1.150. 2.250 The Defendant tried to intimidate the Plaintiffs from finding out by undermining the appraisal requested by the Plaintiffs by claiming that their public adjuster was not impartial. see 1.120. Yet the appraisal was awarded in exactly the amount calculated by their public adjuster, as the umpire (sic) used the same system as the Defendant and the public adjuster used to calculate the amount of damages. The Defendant intended to mislead the Plaintiffs as to the proper amount of repairs. It shall be noted that most insured rely on the insurance companies estimates and does not call upon a public adjuster, making lowballing estimates a profitable incentive for misrepresentation."
Similar allegations are contained in the plaintiffs' complaint, however, it is clear that count five is devoid of any allegations that the defendant knowingly made a false representation which the plaintiffs relied on to their detriment. The court finds that the allegations of count five are legally deficient and, accordingly grants the defendant's motion to strike that count.
COUNT SEVEN--LOSS OF REPUTATION
The loss of reputation claim set forth in the plaintiffs' count seven alleges that the plaintiffs " have suffered a loss of reputation from the property being left an eyesore to the community by the Plainitiff's (sic) failure to settle so that repairs and rebuilding could commence.
A similar claim was considered by the court in Sutera v. Estate of Washton, Superior Court, judicial district of New London, Docket No. 5516177 (March 14, 2003, Corradino, J.) (34 Conn.L.Rptr. 388, ). The court noted: " In the various breach of contract claims set forth in this complaint, there are several that ordinarily would not be allowed under a breach of contract theory. Thus, there are claims for mental anguish and stress of mind, for loss of reputation and the fact that because of the breach the plaintiff will not be allowed to enjoy the full spectrum of life's activities. It is generally true that recovery for mental anguish is not allowed in actions for breach of contract . . . The same is true for loss of reputation arising out of a breach of contract . . . To allow such damage claims would extend contract obligations far beyond reasonable expectations." (Citations omitted; internal quotation marks omitted.) Sutera v. Estate of Washton, supra .
Loss of reputation is recognized as relevant in calculation of damages for groundless or vexations litigation suit or defense or defamation or libel claim pursuant to General Statutes § 52-568 and § 52-237, respectively. However, no Connecticut court has recognized loss of reputation as either an independent cause of action or as a factor measure of damages in a breach of contract claim. The court grants the defendant's motion to strike the plaintiffs' count seven as it is legally insufficient.
COUNT EIGHT--TORTIOUS INTERFERENCE WITH CONTRACTURAL RELATIONS
In count eight of the complaint, the plaintiffs allege that " the Defendant's malfeasance has interfered in the economic activities of the Plaintiff and cause a loss of opportunity and also cause a loss in property value, delayed any prospective sale of the property, and other related damages. 32. As a direct and proximate result of the aforesaid actions, the Plaintiffs may suffer substantial loss of money and property."
" A successful action for tortious interference with business expectancies requires the satisfaction of three elements: " (1) a business relationship between the plaintiff and another party; (2) the defendant's intentional interference with the business relationship while knowing of the relationship; and (3) as a result of the interference, the plaintiff suffers actual loss." (Internal quotation marks omitted.) American Diamond Exchange, Inc. v. Alpert, 101 Conn.App. 83, 90, 920 A.2d 357 (2007).
The allegations count eight do not identify a specific business opportunity that the defendant interfered with, therefore count eight is legally insufficient. Further, the plaintiffs' statement that they " may suffer substantial loss" solidifies that the plaintiffs are unable to identify a specific business opportunity that the defendant interfered with causing an actual loss.
The court finds that count eight fails to allege sufficient facts to support a cause of action for tortious inference with a business opportunity and accordingly grants the defendant's motion to strike that count.
COUNT NINE--TORTIOUS INTERFERENCE WITH CONTRACTURAL RELATIONS
Count nine of the plaintiffs' complaint states " the Defendant's actions have interfered in the Plaintiff's contracts and the relationship with the Plaintiff's contractors, agents and other parties, including the public adjuster appointed by the plaintiffs and their insurance agent. 32. As a direct and proximate result of the aforesaid actions, the Plaintiff may suffer a substantial loss of money and property."
" A claim for intentional interference with contractual relations requires the plaintiff to establish: (1) the existence of a contractual or beneficial relationship; (2) the defendant's knowledge of that relationship; (3) the defendant's intent to interfere with the relationship; (4) that the interference was tortious; and (5) a loss suffered by the plaintiff that was caused by the defendant's tortious conduct . . ." (Internal quotation marks omitted.) Simms v. Seaman, supra, 308 Conn. 543.
The allegations of count nine do not identify a specific contract that the defendant interfered with. In addition, the plaintiffs' allegations do not allege a specific loss that the plaintiff suffered as a result of the defendant's improper interference. The court finds that count nine fails to allege sufficient facts to support a cause of action for tortious inference with a contract and accordingly grants the defendant's motion to strike that count.
COUNT TEN--MARKET MANIPULATION
Connecticut Regulations 38a-8-1 provides " [t]he mission of the Insurance Department is to serve consumers in a professional and timely manner by providing assistance and information to the public and to policy makers, by regulating the insurance industry in a fair, flexible and efficient manner that promotes a competitive and financially sound insurance market for consumers, and by enforcing the insurance laws to ensure that consumers are treated fairly and are protected from unfair practices. The Insurance Department shall act on the Insurance Commissioner's behalf and at his or her direction to fulfill the Commissioner's responsibilities under Title 38a of the Connecticut General Statutes. As such, the insurance department's duties and authority are primarily set out in Title 38a of the Connecticut General Statutes. It is the primary function of the Insurance Department to see that all laws regarding insurance are complied with and that the public interest is protected by the enforcement of the insurance laws and all implementing regulations."
Included in the prayer for relief under count ten, the plaintiffs' complaint is a request that the court " bar the Defendant from seeking further business and from the renewal of its license to transact insurance business in the State of Connecticut, either by direct order, or appropriate fines." There is nothing in Title 38a of the Connecticut General Statutes to suggest that the legislature intended to create a private cause of action for matters which fall within the responsibilities of the Insurance Commissioner. In their objection to the motion to strike count ten, the plaintiffs failed to call the court's attention to any case law recognizing the existence of a private cause of action for any of the wrongs alleged in count ten.
The court agrees with the defendant that count ten fails to allege a recognized cause of action and, accordingly, grants the motion to strike that count.
COUNT TWELVE--HARASSMENT
In count twelve, the plaintiffs allege that the defendant's " actions does not reflect a general pattern but isolated events, then Plaintiffs must have been singled out, or reflect issues directed at the public adjuster appointed by the Plaintiffs. The defendant's action constitutes harassment."
" Connecticut has not recognized a civil cause of action for harassment. While harassment is recognized in our criminal penal code and in cases pertaining to discrimination and harassment in the employment context, this recognition of harassment is based upon statutory violations. Harassing behavior has been alleged in causes of action for emotional distress, but Connecticut has yet to recognize a separate cause of action for harassment . . . Therefore, the motion to strike the plaintiff's harassment claim will be granted." (Internal quotation marks omitted.) Thomas v. Rogers, Superior Court, judicial district of Litchfield, Docket No. CV-12-5007354-S, (quoting from Wagner v. Feldstein, Superior Court, judicial district of Ansonia-Milford, Docket No. CV-05-4003866-S, [February 7, 2006, Ronan, J.T.R.]).
The court can find no case subsequent to 2006, in which any Connecticut court has recognized harassment as a civil cause of action. Accordingly, the court grants the defendant's motion to strike count twelve.
SUMMARY
The court grants the defendant's motion to strike counts one, five, seven, eight, nine, ten, eleven and twelve of the plaintiffs' complaint and overrules the plaintiffs' objection to the motion to strike.