Opinion
FSTCV176030945S
09-11-2019
Donna Krausman v. Liberty Mutual Insurance Co.
UNPUBLISHED OPINION
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Krumeich, Edward T., J.
MEMORANDUM OF DECISION
KRUMEICH, J.
Defendant Liberty Mutual Insurance Company ("Liberty") has moved for summary judgment to dismiss Counts II and III of the complaint on the grounds that there is no private right of action for violation of the Connecticut Unfair Insurance Practices Act ("CUIPA") and plaintiff has not alleged specific facts that show Liberty engaged in a general business practice of improper settlement practices in violation of CUIPA required to prove a violation of the Connecticut Unfair Trade Practices Act ("CUTPA"). For the reasons stated below, the motion is granted in part and denied in part.
The Standards for Deciding a Motion for Summary Judgment
"The standards ... [for] review of a ... motion for summary judgment are well established. Practice Book [§ 17-49] provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law ... In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party ... The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law ... and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact ... A material fact ... [is] a fact which will make a difference in the result of the case ..." DiPietro v. Farmington Sports Arena, LLC, 306 Conn. 107, 115-16 (2012), quoting H.O.R.S.E. of Connecticut, Inc. v. Washington, 258 Conn. 553, 558-60 (2001). (Citations omitted.)
Once the movant for summary judgment has satisfied the initial burden of showing the absence of a material issue of fact, the burden shifts to the opponent to establish that there is a genuine issue of material fact: "it is then ‘incumbent upon the party opposing summary judgment to establish a factual predicate from which it can be determined, as a matter of law, that a genuine issue of material fact exists.’ " Iacurci v. Sax, 313 Conn. 786, 799 (2014), quoting Connell v. Colwell, 214 Conn. 242, 251 (1990).
There is No Private Right of Action Under CUIPA
In Artie’s Auto Body, Inc. v. Hartford Fire Ins. Co., 317 Conn. 602, 623 (2015), the Supreme Court observed: "CUIPA, which specifically prohibits unfair business practices in the insurance industry and defines what constitutes such practices in that industry; see General Statutes § 38a-816; does not authorize a private right of action but, instead, empowers the commissioner to enforce its provisions through administrative action. See General Statutes § § 38a-817 and 38a-818." This dictum recognizes that the CUIPA statute does not contain an express private right of action unlike CUTPA, see C.G.S. § 42-110g(a).
A leading authority has opined that the Supreme Court in Artie’s resolved the issue left open in previous appellate cases and found there was no private right of action under CUIPA:
An additional question is whether there is a private cause of action under CUIPA. In Macomber v. Travelers Property and Casualty Corp., [ 261 Conn. 620, 645 (2002)], the Supreme Court avoided the issue by treating a claim apparently premised on CUIPA as a CUTPA claim drawing on CUIPA. Lower court authority had been divided on the issue, with most courts holdings that there was no private cause of action under CUIPA. In 2015, however, the Supreme Court found in Artie’s Auto Body, Inc. v. Hartford Fire Ins. Co. that there is no private cause of action provided by CUIPA, but that CUIPA violations, as described in Mead [v. Burns, 199 Conn. 651, 657 n.5 (1986)], can form the basis of a CUTPA claim. Because any conduct that violates CUIPA is likely to violate CUTPA, the effect of the decision in Artie’s, that there is no private cause of action, is likely to be limited. 12 Conn.Prac., Unfair Trade Practices § 3.13 Insurance.
Although the Court agrees that the above statement in Artie’s was dictum, and thus not binding on the Court, the Court agrees with the majority of courts which have concluded there is no private right of action under CUIPA for the reasons summarized in Judge Tobin’s opinion in Mendoza v. Allstate Ins. Co., 2012 WL 1139136 *3 (2012). Accord, VP Elec., Inc. v. Graphic Arts Mut. Ins. Co., 2013 WL 4737327 *7 (D.Conn. 2013) (Hall, J.).
Rosenthal Law Firm, LLC v. Cohen, 190 Conn.App. 284, 291 (2019):"[D]ictum is an observation or remark made by a judge in pronouncing an opinion upon a cause, concerning some rule, principle, or application of law, or the solution of a question suggested by the case at bar, but not necessarily involved in the case or essential to its determination ... Statements and comments in an opinion concerning some rule of law or legal proposition not necessarily involved nor essential to determination of the case ... are obiter dicta, and lack the force of an adjudication."
Summary judgment is granted to dismiss the CUIPA claim in Count II.
There are Genuine Issues of Material Fact Concerning the CUTPA Claim
" ‘In order to sustain a CUIPA cause of action under CUTPA, a plaintiff must allege conduct that is proscribed by CUIPA.’ 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.’ " Artie’s Auto Body, Inc., 317 Conn. at 623-24. "... [C]laims of unfair settlement practices under CUIPA require a showing of more than a single act of insurance misconduct." Mead v. Burns, 199 Conn. 651, 659 (1986).
Defendant argues that Liberty is entitled to summary judgment on the CUTPA claim alleged in Count III because the complaint fails to allege specific facts to support the conclusory allegation of a general business practice of unfair settlement practices. Both cases cited by Liberty concerned the granting of a motion to strike a CUTPA claim based on CUIPA violations for failure to allege specific facts that establish a pattern and practice of unfair settlement practices by the defendant. See e.g., Family Garage, Inc. v. Liberty Mut. Fire Ins. Co., 2017 WL 5202841 *5 (Conn.Super. 2017) (Truglia, J.); Wood v. Club, LLC, 2013 WL 2383642 *5 (Conn.Super. 2013) (Adams, J.).
C.G.S. Section 38a-815 provides in relevant part: "No person shall engage in this state in any trade practice which is defined in section 38a-816 as ... an unfair method of competition or an unfair or deceptive act or practice in the business of insurance ..." In turn, C.G.S. § 38a-816 provides in relevant part that "[t]he 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 of any of the following ... failing to acknowledge and act with reasonable promptness upon communications with respect to claims arising under insurance policies ... failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies ... refusing to pay claims without conducting a reasonable investigation based upon all available information ... not attempting in good faith to effectuate prompt, fair and equitable settlement of claims in which liability has become reasonably clear ..." In Capstone Building Corp. v. American Motorists Ins. Co., 308 Conn. 760, 802 n.41 (2013), the Supreme Court held: "[Section] 38a-816 ... requires that a plaintiff allege and prove that the relevant conduct was a part of a general business practice." In discussing this issue, the Supreme Court has stated: "The term ‘general business practice’ is not defined in the statute, so we may look to the common understanding of the words as expressed in a dictionary ... ‘General’ is defined as ‘prevalent, usual [or] widespread’ ... and ‘practice’ means [p]erformance or application habitually engaged in ... [or] repeated or customary action.’ " Lees v. Middlesex Ins. Co., 229 Conn. 842, 849 n.8 (1994). In using this term, the legislature has determined that "isolated instances of unfair insurance settlement practices are not so violative of the public policy of this state as to warrant statutory intervention." Lees, supra, 229 Conn. at 851. Accordingly, the plaintiff "must allege that the insurer has treated other claimants unfairly in a manner that constitutes a general business practice." Urban Apparel Plus, LLC v. Sentinel Ins. Co., Ltd., 2013 WL 6171114 *5 (Conn.Super. 2013) (Fischer, J.) quoting Colonial Restaurant Supply, LLC v. Travelers Indemnity Co. of America, Superior Court, judicial district of New Haven, Docket No. CV-07-5009224-S (June 12, 2007, Skolnick, J.).
Liberty contends that the only facts at issue a court may consider on a motion for summary judgment are those alleged in the pleadings citing DeCorso v. Calderaro, 118 Conn.App. 617, 622 (2009). According to Liberty, evidence submitted in opposition to the motion may not be considered because the facts asserted were not plead in the complaint. Defendant argues the complaint fails to allege sufficient facts to support violations of CUIPA and CUTPA so the court must grant summary judgment citing Lees v. Middlesex Ins. Co., 229 Conn. 842, 849 (1994).
Liberty confuses the burden on plaintiff to show that the facts alleged in the complaint sufficiently state a viable claim in opposing a motion to strike under Practice Book Section 10-40 and defendant’s "burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law ..." under Practice Book Section 17-49. DiPietro, 306 Conn. at 115-16.
There may be certain cases where Liberty’s strategy of attacking the sufficiency of the CUIPA claim in a complaint might prevail, such as in Lees, 229 Conn. at 848, where "plaintiff has not alleged unfair settlement practices by the defendant in its handling of any other insurance claim or claims ..." However, here the complaint does not allege a singular mishandling of plaintiff’s claim alone, but also alleges specific practices in the handling of other claims similar to the approach taken to plaintiff’s claim and cites similar settlement practices in five other cases involving underinsured motorist claims that were not properly evaluated, were undervalued and where the insured was forced to litigate to recover monies rightfully owed under the policies; these allegations would allow plaintiff to introduce evidence of the type of "general business practice" that would violate CUIPA and be actionable under CUTPA. See Mead v. Burns, 199 Conn. 651, 666 (1986). The material facts alleged in the complaint if proven would raise an inference that the settlement practices that plaintiff experienced to her detriment were a "general business practice" of Liberty. In Karas v. Liberty Mutual, 33 F.Supp.3d 110, (2014) (Underhill, J.), Judge Underhill concluded that three similar instances of alleged improper settlement practices sufficed to support a general business practice in violation of CUIPA and state a claim actionable under CUTPA.
In Larobina v. McDonald, 274 Conn. 394, 401 (2005), the Supreme Court identified when it would be appropriate to use a motion for summary judgment to test the legal sufficiency of a complaint: "we conclude that the use of a motion for summary judgment to challenge the legal sufficiency of a complaint is appropriate when the complaint fails to set forth a cause of action and the defendant can establish that the defect could not be cured by repleading." These factors are not present here.
There is a split of authority as to the degree of specificity relating to general business practices required to state a CUTPA claim based on CUIPA to withstand a motion to strike. See Urban Apparel Plus, LLC v. Sentinel Ins. Co., Ltd., 2013 WL 6171114 *5. Judge Fischer’s well-reasoned conclusion is that general pleadings concerning specific practices are sufficient in alleging a CUIPA complaint before plaintiff has had an opportunity to conduct discovery into insurance company records as to the handling of other cases. Accord, RAMS II, LLC v. Massachusetts Bay Ins. Co., 2016 WL 3266084 *3 (Conn.Super. 2016) (Wilson, J.) : " ‘The better reasoned rule is that a plaintiff ‘need not plead specific instances of insurer misconduct other than those instances specific to the plaintiff so long as the misconduct alleged involves other insureds. This is so because ‘[u]ntil discovery has been completed ... the plaintiff is entitled to the opportunity to gather information supporting its claim that the defendants’ alleged wrongful conduct has been committed with such frequency as to indicate a general business practice. After discovery a motion for summary judgment would be the appropriate vehicle to test whether the plaintiff can show a general business practice of insurance misconduct.’ "(Citations omitted.)
The burden was on defendant to submit proof that Liberty had not engaged in the general businesses practices alleged, which, in turn, would require plaintiff to submit evidence in support of its claim. See Zielinski v. Kotsoris, 279 Conn. 312, 318 (2006). Aside from attacking the sufficiency of plaintiff’s pleading, Liberty has presented no evidence that would demonstrate the absence of genuine issues of material fact as to its business practices. Without such proof, plaintiff need not submit any evidence in opposition to the summary judgment motion. Id.
"In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law. The courts hold the movant to a strict standard. To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ... As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent ..." Zielinski, 279 Conn. at 318.
Nevertheless, plaintiff has submitted evidence in support of the allegations that the settlement practices followed in her’ case, that dishonored her underinsured motorist claim without justification after the tortfeasor’s liability carrier tendered its policy limits, forced her to commence litigation and to prevail in arbitration to recover $19,500 under her underinsured motorist policy with Liberty, was part of its general settlement practices designed to force insureds to accept unreasonable settlements at less than the fair value of claims. Among the proofs offered in opposition to this motion was the affidavit of plaintiff’s counsel that related his personal experience with Liberty’s settlement practices in this case and other cases in which he represented other plaintiff’s negotiating settlements with Liberty, which employed the same practices.
Plaintiff also submitted excerpts from the transcripts of depositions of Liberty’s employees concerning the handling of her claim and Liberty’s settlement practices.
Judge Wilson discussed various methods of proving a general business practice in RAMS II, LLC, 2016 WL 3266084 *3, including "if the plaintiff had rounded up a few other insureds who experienced a similar issue with the insurer. After all, citing similar previous incidences of the insurer’s misconduct is itself nothing more than a method of implying a general business practice."
"Whether the ‘general business practice’ requirement can be satisfied by implication based on the insurer’s conduct in handling a plaintiff’s isolated claim must be determined on a case-by-case basis, but some potential examples might include: (a) the practice at issue is prescribed in company documents or manuals intended for its employees; (b) the insurer, through its words or actions, or that of its employees, indicates that the procedure it followed was performed in accordance with company policy (for example, defending its performance during an investigation by informing the claimant that its investigations are typically performed in that manner); (c) the procedure at issue appears standardized- for instance, relying on a particular pricing guide, formula, or valuation method for valuing the plaintiff’s claim- such that it is reasonable to infer that the insurer uses the same procedure with other claimants, being that it is unlikely that the insurer singled out the plaintiff as a rare or isolated instance to use that procedure; or (d) the misconduct occurs in response to such a seemingly ordinary, every-day, run-of-the-mill claim that it is reasonable to infer that the insurer’s conduct was in accordance with its general business practices- in other words, the plaintiff’s claim was so lacking in uniqueness that it is fair to infer that the insurer’s response was not unique either. ‘In fact, in many instances, these methods of proof could be more indicative of a general business practice than if the plaintiff had rounded up a few other insureds who experienced a similar issue with the insurer. After all, citing similar previous incidences of the insurer’s misconduct is itself nothing more than a method of implying a general business practice. These points raise further doubts about the reasonableness of the strict view.’ " RAMS II, LLC, 2016 WL 3266084 *3, quoting Labonne v. Hingham Mutual Fire Ins. Co, 2014 WL 2597802*5 n.2 (Conn.Super. 2014) (Devine, J.).
Liberty misconstrued Judge Lee’s opinion in Williams v. Safeco Ins. Co. of Am., 2015 WL 7421784 *5 (Conn.Super. 2015) (Lee, J.) , in which he analyzed the type of evidence that would be admissible to prove the general settlement practices to satisfy standards set by the Supreme Court in Lees for a CUTPA claim based on a CUIPA violation. Judge Lee granted a motion in limine to bar the admission of unadjudicated complaints in other cases and in dicta discussed the types of proofs that would be admissible at trial concerning the insurer’s alleged general settlement practices:
In light of the foregoing, the court will consider admission of the following four categories of evidence to prove a "general business practice":
1. Live testimony by other insureds or their agents of similar practices by Safeco because the witnesses would be subject to cross examination and prior deposition;
2. Evidence of similar practices in complaints before the insurance commissioner that have been ruled upon where there was a fair opportunity to contest the findings, or testimony of Insurance Department personnel, who would be subject to cross examination;
3. Written evidence of similar practices in complaints before the Superior Court or other courts of record that have been adjudicated adversely to Safeco, which are entitled to collateral estoppel effect; and
4. Evidence provided by the insurer’s employees and/or internal documents as to its policies and practices. Williams, 2015 WL 7421784 *5.
The evidence in the affidavits of plaintiff’s counsel is not hearsay but based on his personal experience negotiating settlements with Liberty. If offered at trial it would fall into the first category of admissible evidence identified by Judge Lee: testimony by an agent of other insureds of similar practices by the insurer. To be admissible at trial the witness would have to be subject to cross examination and prior deposition so that attorney could not act as trial counsel. See generally Nevas v. MacDonald, 2006 WL 618568 *2 (Conn.Super. 2006) (Jennings, J.). That is not an impediment, however, for consideration of the affidavit as evidence of genuine issues of material facts to defeat a motion for summary judgment.
In the case cited by Liberty the affidavit was based on hearsay and disallowed as evidence of a genuine issue to be tried. See Great County Bank v. Pastore, 241 Conn. 423, 436-37 (1997).
In any event, because defendant failed to meet its burden of proving the absence of a genuine issue of material fact relating to its settlement practices plaintiff was not required to submit any proof of its allegations. The motion for summary judgment on the CUTPA claim alleged in Count III is denied.