Opinion
No. CV-05-4010486 S
January 5, 2006
MEMORANDUM OF DECISION RE MOTION TO STRIKE ( #108)
The plaintiff insurer brings this action against the defendant claiming that the defendant owes a premium balance for insurance which it provided to the defendant.
The defendant, in addition to denying the plaintiff's claim, has filed a three-count counterclaim. In its counterclaim, the defendant claims that the plaintiff miscalculated the premium due by using an improper classification code and an improper payroll amount. The defendant further alleges that in calculating its audit adjustment the plaintiff knew or should have known it was using an improper classification code which would result in a substantial increase in premium.
The defendant also alleges that on information and belief the plaintiff gave its auditor incentives, bonuses and other benefits, financial or otherwise to generate additional premiums through said audits.
Additionally, the defendant alleges that the plaintiff had a policy of reporting overdue and unpaid debts to credit bureau reporting services and warned the plaintiff to "pay promptly to protect your credit history" thereby causing the defendant to likely pay more than the plaintiff was entitled to, to protect his credit history.
The first count of the counterclaim alleges a violation of the Connecticut Unfair Trade Practices Act. The second count alleges the negligent infliction of emotional distress. The third count alleges a breach of the implied covenant of good faith and fair dealing.
The plaintiff has moved to strike all three counts of the counterclaim as insufficient to state a cause of action.
A motion to strike tests the sufficiency of the allegation of a complaint to state a claim upon which relief can be granted. Ferryman v. Groton, 212 Conn. 138, 142 (1989). In ruling upon a motion to strike, the complaint must be construed in a manner most favorable to the plaintiff. (In this case the defendant-plaintiff on the counterclaim.) Sassone v. Lepore, 226 Conn. 773, 780 (1993).
As to the first count of the counterclaim, the plaintiff claims that it fails to state a cause of action for the reason that an insurer's conduct cannot support a claim pursuant to CUTPA unless the conduct alleged would also satisfy the requirements for a claim under the Connecticut Unfair Insurance Practices Act (CUIPA). The court agrees with the plaintiff. In order for an insurer's conduct to be actionable under CUTPA, it must also satisfy the requirements for a claim under CUIPA. Mead v. Burns, 199 Conn. 651 (1986); Lees v. Middlesex Insurance Co., 229 Conn. 842 (1994).
Thus the allegation of the first count are insufficient to state a cause of action pursuant to CUTPA.
The plaintiff moves to strike the second count of the counterclaim on the basis that the defendant has failed to allege any facts suggesting that the emotional distress he allegedly suffered might result in illness or bodily harm. See Scanlon v. Connecticut Light Power Co., 258 Conn. 436 (2001).
However, in count two, the defendant incorporates the factual allegations of count one and alleges that the plaintiff "should have realized that its conduct involved an unreasonable risk of causing emotional distress to the defendant and that the plaintiff, Zurich, should have realized that the emotional distress might result in illness or bodily harm of the defendant."
In the court's opinion, such allegations are sufficient to allege a cause of action for the negligent infliction of emotional distress.
Finally, the plaintiff moves to strike the third count of the counterclaim which alleges that the plaintiff breached the implied covenant of good faith and fair dealing, for the reason that the defendant has failed to allege sufficient facts to establish that the plaintiff acted in bad faith.
Again, the defendant incorporates the allegations of count one and alleges that the alleged acts on the part of the defendant "had the effect of destroying or injuring the defendant's right to receive the fruits of the parties' insurance contract, thus constitute a breach of an implied covenant of good faith and fair dealing."
An action for breach of the covenant of good faith and fair dealing requires proof that the party against whom such claim is made, acted in bad faith. OG Industries, Inc. v. Travelers Property Cas. Corp., 2001 WL 1178709 at 1 (Conn.Super.Ct. September 7, 2001 (Cremins, J.)).
"Bad faith in general implies both `actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive . . .' Bad faith means more than mere negligence; it involves a dishonest purpose. Habetz v. Condon, 224 Conn. 231, 237 (1992).
In paragraph six of count one, which is incorporated in count three, the defendant alleges that the plaintiff "knew or should have known" that the classification code was improper and would result in a substantial increase in premium. If the allegations of paragraph six are construed most favorably to the defendant they would appear to support a claim that the plaintiff intentionally utilized an incorrect code in order to increase the premium due. Such conduct would be more than mere negligence and involve a dishonest purpose.
For the above reasons, the plaintiff's motion to strike the defendant's counterclaim is granted as to count one and denied as to counts two and three.