Opinion
CV126032396
09-19-2018
Edward O’CONNOR v. QBE INSURANCE CORPORATION et al.
UNPUBLISHED OPINION
OPINION
James W. Abrams, Judge
This case, which features a rich procedural history, was initially brought by Complaint dated August 23, 2012 and involves plaintiffs Edward O’Connor and Eileen O’Connor’s allegations of wrongdoing by QBE Insurance Corp. (QBE), and its managing general agent, Community Association Underwriters of America, Inc. (CAU), during the claim settlement process regarding a claim for accidental damage suffered to the plaintiffs’ condominium unit. The operative complaint, filed on November 16, 2016, includes counts against each defendant for breach of contract, negligent infliction of emotional distress, violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq. (hereinafter "CUTPA"), and violation of the Connecticut Unfair Insurance Practices Act, General Statutes § 38a-815 et seq. (hereinafter "CUIPA").
By Motion for Summary Judgment dated February 8, 2018, the defendants seek judgment in their favor as to counts III through VI, which contain allegations of negligent infliction of emotional distress, and counts VII and VIII, which contain allegations of CUTPA and CUIPA violations. The plaintiffs filed a Memorandum in Opposition dated April 25, 2018 and the defendants filed a Reply Memorandum dated May 30, 2008. The parties presented oral argument before the court on June 12, 2018.
Each of the plaintiffs brings a separate count of negligent infliction of emotional distress against each of the defendants.
The plaintiffs together allege one CUTPA/CUIPA count against each defendant.
In the operative complaint, the plaintiffs contest various aspects of the defendants’ assessment of their damage claim, including the scope of the assessed damage, the decision to repair certain items rather than replace them, the application of a depreciation deduction to brand new construction and the defendants’ refusal to provide underlying details of the estimate unless the plaintiffs provided them an "undisputed" sworn proof of loss statement. In support of their negligent infliction of emotional distress claims, the plaintiffs further allege the following behavior on the part of the defendants: they failed to investigate and estimate the damage to their unit in an adequate and impartial manner; failed to timely pay them for their loss; failed to attempt in good faith to effectuate a prompt, fair and equitable settlement; hindered the plaintiffs’ ability to make timely repairs; failed to reasonably and promptly explain the basis of their estimate, their denial of other estimates and their refusal to arbitrate; and failed to provide a report that included the specific areas they had identified for repair.
The plaintiffs contend that, through the foregoing acts and omissions, the defendants created an unreasonable, foreseeable risk of causing them emotional distress and that as a result, the plaintiffs have suffered from various stress-based physical symptoms, as well as compensable mental and emotional distress.
The plaintiffs further allege, in short, that the various wrongful actions and omissions described in the Complaint are frequent and that they constitute general practices employed by the defendants continuously in the settlement of claims other than the plaintiffs’ claim, and, therefore, that they constitute unfair and deceptive acts in trade or commerce in violation of CUTPA and CUIPA.
As relates to CUIPA, the plaintiffs specifically allege violations of General Statutes § 38a-816(6). That subsection defines "unfair claim settlement practices" as committing any of the following acts with such frequency as to indicate a general business practice: "(A) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue; (B) failing to acknowledge and act with reasonable promptness upon communications with respect to claims arising under insurance policies; (C) failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies; (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; (G) compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds; (H) attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application; (I) attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of the insured; (J) making claims payments to insureds or beneficiaries not accompanied by statements setting forth the coverage under which the payments are being made; (K) making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration; (L) delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information; (M) failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage; (N) failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement; (O) using as a basis for cash settlement with a first party automobile insurance claimant an amount which is less than the amount which the insurer would pay if repairs were made unless such amount is agreed to by the insured or provided for by the insurance policy."
In their Motion for Summary Judgment, the defendants argue that they could not have been the cause of the plaintiffs’ emotional distress because they have never had any direct contact with the plaintiffs, but rather, communicated with them only through multiple intermediaries. They contend further that, to the extent the actions of the intermediaries caused the plaintiff’s emotional distress, the defendants cannot be held liable for the negligence of independent third parties who, pursuant to the law governing independent insurance adjusters, owed no duty to the plaintiffs. Additionally, the defendants argue, they owe no duty to the plaintiffs because the plaintiffs are not named insureds on the policy covering their property. The defendants claim finally that the plaintiffs’ CUTPA and CUIPA claims are not viable because, although this action has been pending for years, they have produced no evidence that the events of which they complain represent a general business practice rather than an isolated incident.
In opposing summary judgment, the plaintiffs respond that the law governing negligent infliction of emotional distress claims does not require direct contact between plaintiffs and defendants, but rather, focuses on the conduct at issue and the foreseeability of it causing someone emotional distress. Moreover, they contend, there are material questions of fact as to whether the defendants’ own conduct caused the plaintiffs’ emotional distress and, additionally, whether the intermediaries were the defendants’ agents, subject to their control, so as to render any tortious behavior on their part attributable to the defendants. As to their CUTPA/CUIPA claims, the plaintiffs argue that the defendants have not met their burden, on summary judgment, of negating those claims. They contend further that discovery in this matter is ongoing, and the defendants, to date, have failed to provide requested information in regard to their business practices. In any event, the plaintiffs claim, there presently is enough evidence that the defendants regularly engage in unfair claims settlement practices for the CUTPA/CUIPA claims to survive summary judgment.
I
FACTS
The plaintiffs are the owners of a condominium unit in the Sylvan Point Condominium complex located in Branford, Connecticut. The unit is covered by a master policy of insurance issued by the defendants to the Sylvan Point Condominium Association (hereinafter "the Association"). Although the Association is the only named insured on the policy, that policy provides the primary insurance coverage for the individual condominium units and allows for direct reimbursement to unit owners for covered damage. In denying a previous Motion to Dismiss filed in this action, in which the defendants contended that the plaintiffs lacked standing because they were not named insureds, the court (Wilson, J.) concluded that the plaintiffs were third-party beneficiaries of the insurance contract and, therefore, had a right to enforce its provisions.
The defendants sought certification from the Connecticut Supreme Court to file an interlocutory appeal from Judge Wilson’s decision denying their Motion to Dismiss; see General Statutes § 52-265a (allowing expedited appeals in matters involving substantial public interest); but that request was denied. At oral argument on the instant Motion, defense counsel conceded that the ruling on the Motion to Dismiss constitutes the law of the case.
During 2011, the plaintiffs undertook extensive renovations of their condominium unit prior to occupying it, at a total cost of approximately $252,000. In December 2011, when the renovations were complete, but before the plaintiffs moved in, the washing machine owned by their upstairs neighbor, Thomas Duffy, overflowed. This resulted in significant water damage to the plaintiffs’ unit. After the defendants were notified of the incident, they retained Allen Dahle & Co. (Dahle), an independent insurance adjusting company, and Accurate Reconstruction (Accurate), a damage reconstruction company, to assess the water damage. Mario DiMondo, an adjuster from Dahle, initially opined that the cost to repair the damage exceeded $80,000. An estimate from a contractor was required pursuant to the defendants’ rules for claims exceeding $50,000 and Thomas Licciardi, from Accurate, estimated that repairs to the unit would cost only $45,564.26. The contractor who had performed the renovations to the plaintiffs’ unit estimated the damage to be much higher, at $193,114.15. (Pl.’s Memo Opp. SJ, Ex. A ¶¶ 7-19, Ex. B.)
Duffy also was named as a defendant in this action. After he died on September 14, 2013, the administratrix of his estate was substituted as a party defendant. On August 30, 2017, the plaintiffs withdrew the action against Duffy’s administratrix.
Prior to providing his estimate, Licciardi offered to complete the repairs himself (Pl.’s Memo Opp. SJ, Ex. C.)
The Association hired Louis Ranciato, of Ranciato & Ranciato, Licensed Public Adjusters Group, LLC, to represent it in the adjustment of the plaintiff’s claim. Over the course of the next several months, the parties, through their respective representatives, made various efforts to resolve the claim. Although the defendants increased Licciardi’s initial estimate somewhat, it still was not acceptable to the plaintiffs. The defendants refused the plaintiffs’ invitation to engage in alternative dispute resolution, declined to the plaintiffs provide detailed information about the estimate and this lawsuit resulted.
On April 6, 2012, the defendants increased Licciardi’s estimate by $14,500, but also applied a ten percent depreciation deduction. On September 26, 2012, after an electrician’s inspection of the unit revealed extensive electrical damage, the defendants increased their prior estimate by over $36,500 and abandoned the depreciation deduction. (Pl.’s Memo Opp. SJ, Ex. A ¶¶ 20-29.)
II
LAW
The standard governing summary judgment motions is well settled. Pursuant to Practice Book § 17-49, 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." When deciding a summary judgment motion, "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." (Internal quotation marks omitted.) Stuart v. Freiberg, 316 Conn. 809, 820-21, 116 A.3d 1195 (2015). Summary judgment procedures are "designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried ... However, since litigants ordinarily have a constitutional right to have issues of fact decided by a jury ... the moving party for summary judgment is held to a strict standard ... of demonstrating his entitlement to summary judgment." (Citation omitted; footnote omitted; internal quotation marks omitted.) Grenier v. Commissioner of Transportation, 306 Conn. 523, 534-35, 51 A.3d 367 (2012).
A) Negligent Infliction of Emotional Distress Claims
The defendants argue that because they did not have any direct contact with the plaintiffs during the adjustment of their insurance claim, they cannot, as a matter of law, be held liable for causing the plaintiffs’ emotional distress. They note that the plaintiffs, who were not named insureds on the Association’s policy, received information about the claim through the Association and its agent, Ranciato, and that all communications to those parties from the defendants, in turn, were channeled through DiMondo and/or Licciardi. Accordingly, they claim that the plaintiffs have not shown that the defendants committed any of the acts or omissions at issue. The defendants contend further that DiMondo and Licciardi were separate and independent third parties, unaffiliated with the defendants, and, to extent their conduct was tortious, it cannot be attributed to the defendants because there is no indication that they ordered, controlled or authorized it. They claim finally that, pursuant to the law governing independent insurance adjusters, DiMondo and Licciardi owed no duty to the plaintiffs and, therefore, no breach of duty on their part can be imputed from them to the defendants.
The plaintiffs respond that the defendants’ focus on whether the parties had direct contact is misguided, as the law governing negligent infliction of emotional distress claims contains no such requirement, but rather, is focused on the conduct at issue and the foreseeability of that conduct causing emotional distress. They observe that the defendants have produced no evidence explaining their own involvement in the adjustment process and the positions they took during that process. As to whether DiMondo and Licciardi acted as the defendants’ agents, the plaintiffs have provided evidence which, they contend, creates an issue of material fact as to whether the defendants controlled their adjuster’s and contractor’s behavior and, therefore, are legally responsible for it. Relatedly, the plaintiffs argue, the case law holding that independent adjusters owe no duty of care to insured parties is premised on the general notion that those adjusters are beholden to the insurers who retain them, and, therefore, it does not aid the defendants, but rather, reinforces the conclusion that DiMondo and Licciardi acted as their agents. In their Reply Memorandum, the defendants respond that they owed the plaintiffs no duties during the claim settlement process because the plaintiffs are not named insureds on the policy covering their property.
The defendants’ various claims are in conflict with both the law and the evidentiary record, and the plaintiffs’ objections are well taken. Accordingly, the defendants have not shown that they are entitled to summary judgment on the plaintiffs’ negligent infliction of emotional distress claims. As relates to the defendants’ claim that their lack of direct contact with the plaintiffs precludes the plaintiffs’ recovery on a negligent infliction of emotional distress claim, they have cited no law in support of that proposition. In fact, there is no such requirement; rather, the plaintiffs are correct that the relevant inquiry focuses on a defendant’s conduct, the foreseeability of that conduct causing a plaintiff emotional distress, and whether the plaintiff’s distress actually is attributable to the defendant’s conduct rather than some other circumstance.
It is well established that, "No prevail on a claim of negligent infliction of emotional distress, the plaintiff must prove: (1) the defendant’s conduct created an unreasonable risk of causing the plaintiff emotional distress; (2) the plaintiff’s distress was foreseeable; (3) the emotional distress was severe enough that it might result in illness or bodily harm; and (4) the defendant’s conduct was the cause of the plaintiff’s distress." (Internal quotation marks omitted.) Riley v. Travelers Home & Marine Ins. Co., 173 Conn.App. 422, 431, 163 A.3d 1246, cert. granted on other grounds, 326 Conn. 922, 169 A.3d 234 (2017). "The foreseeability requirement in a negligent infliction of emotional distress claim is more specific than the standard negligence requirement that an actor should have foreseen that his tortious conduct was likely to cause harm [of the same general nature as that suffered by the plaintiff] ... In order to [prove] negligent infliction of emotional distress, the plaintiff must [show] that the actor should have foreseen that her behavior would likely cause harm of a specific nature, i.e., emotional distress likely to lead to illness or bodily harm." (Internal quotation marks omitted.) Stancuna v. Schaffer, 122 Conn.App. 484, 490, 998 A.2d 1221 (2010).
This "essentially requires that the fear or distress experienced by the plaintiffs be reasonable in light of the conduct of the defendants. If such a fear were reasonable in light of the defendants’ conduct, the defendants should have realized that their conduct created an unreasonable risk of causing distress, and they, therefore, properly would be held liable. Conversely, if the fear [or distress] were unreasonable in light of the defendants’ conduct, the defendants would not have recognized that their conduct could cause this distress and, therefore, they would not be liable." (Internal quotation marks omitted.) Carrol v. Allstate Ins. Co., 262 Conn. 433, 447, 815 A.2d 119 (2003).
Connecticut’s appellate courts, in rejecting challenges to the sufficiency of the evidence in negligent infliction of emotional distress cases, have upheld judgments against insurance companies that were based on the conduct of their agents and employees during the investigation of claims, which the insurers directed, controlled and/or ultimately endorsed through their denial of those claims. See, e.g., Carrol v. Allstate Ins. Co., 262 Conn. 433, 437, 439-41, 444-45, 815 A.2d 119 (2003) (examining the activities of insurer’s own investigator and an independent fire expert it had retained to assist in investigating plaintiff’s claim); Riley v. Travelers Home & Marine Ins. Co., supra, 173 Conn.App. 427-28, 436-40 (examining the activities of defendant’s principal fire investigator). "[I]t is a general rule of agency law that the principal in an agency relationship is bound by, and liable for, the acts in which his agent engages with authority from the principal, and within the scope of the [agency relationship]." (Internal quotation marks omitted.) Gordon v. Tobias, 262 Conn. 844, 849, 817 A.2d 683 (2003); see also Restatement (Third) Agency § 7.04 (2006) (principal liable for agent’s tortious conduct when that conduct is within scope of agent’s actual authority or is ratified by the principal).
Consistent with these principles, insurers frequently have been held liable for the tortious conduct of their adjusters. See generally Annot., 6 A.L.R.5th 297 (1992) (Liability of insurer, or insurance agent or adjuster, for infliction of emotional distress); Annot., 39 A.L.R.3d 739 (1971) (Insurer’s tort liability for acts of adjuster seeking to obtain settlement or release).
The plaintiffs contend that there is evidence that DiMondo and Licciardi acted as the defendants’ agents, while the defendants claim that they were independent third parties for whose negligence the defendants cannot be held liable. The necessary elements of an agency relationship are as follows: "(1) a manifestation by the principal that the agent will act for him; (2) acceptance by the agent of the undertaking; and (3) an understanding between the parties that the principal will be in control of the undertaking." (Internal quotation marks omitted.) National Publishing Co., Inc. v. Hartford Fire Ins. Co., 287 Conn. 664, 678, 949 A.2d 1203 (2008). Factors to consider when determining whether such a relationship exists include: "whether the alleged principal has the right to direct and control the work of the agent; whether the agent is engaged in a distinct occupation; whether the principal or the agent supplies the instrumentalities, tools, and the place of work; and the method of paying the agent." (Internal quotation marks omitted.) Id. "In addition, [a]n essential ingredient of agency is that the agent is doing something at the behest and for the benefit of the principal." (Internal quotation marks omitted.) Id. Whether an agency relationship exists "may be established by circumstantial evidence based upon an examination of the situation of the parties, their acts and other relevant information." Gateway Co. v. DiNoia, 232 Conn. 223, 240, 654 A.2d 342 (1995). Because the existence or non-existence of an agency relationship is a question of fact; National Publishing Co., Inc. v. Hartford Fire Ins. Co., supra, 677; it cannot be resolved on summary judgment in the face of conflicting evidence.
See Pelletier v. Sordoni/Skanska Const. Co., 264 Conn. 509, 517-18, 825 A.2d 72 (2003) (explaining general rule that employer is not liable for negligence of its independent contractors over whom it has no power or control).
There is no dispute that the defendants dispatched DiMondo and Licciardi to adjust and estimate the plaintiffs’ loss and that the two accepted that undertaking; the parties’ disagreement focuses on whether the defendants remained in control of the process. In support of its contention that DiMondo (Dahle) and Licciardi (Accurate) were independent, the defendants have submitted the affidavit of William Walsh, an Executive Adjuster with CAU. (Def.’s Mem. SJ, Ex. B.) Therein, Walsh avers that Dahle is "an independent insurance adjusting company," that Accurate is "an independent general contractor" and that both have "no affiliation with the defendants." (Id., 10, 11.) The terms used by the parties are insufficient to establish that one party did, or did not, act as an agent of another. See Wesley v. Schaller Subaru, Inc., 277 Conn. 526, 543-44, 547, 893 A.2d 389 (2006) (terms used by parties to describe their relationship are not determinative of whether an agency exists; rather, the operative terms of their agreement or understanding control); see also Kenneth v. One Beacon Ins., Superior Court, judicial district of New London, Docket No. CV05-128895 (October 24, 2005) (40 Conn.L.Rptr.) (on motion for summary judgment, insurer’s affidavit that purported agent was "independent" was insufficient to negate existence of agency relationship); Restatement (Third) Agency § 1.01, comment (c) (2006) ("[T]he common term ‘independent contractor’ is equivocal in meaning and confusing in usage because some termed independent contractors are agents while others are nonagent service providers").
In his affidavit, Walsh further avers that DiMondo and Licciardi were "given control over the methods [they] used to adjust the loss, the results of which were subject to review and approval by the defendants" in assessing the water damage at the plaintiffs’ unit. (Def.’s Mem. SJ, Ex. B, ¶¶ 10, 11.) The plaintiffs, however, have produced substantial documentary evidence tending to refute the proposition that DiMondo and Licciardi were acting independently of the defendants during the adjustment process, namely, numerous written communications involving representatives of the defendants and internal reports documenting progress on the claim. If credited by the factfinder, this evidence would show that the defendants were intimately involved in the adjustment process, making many of the challenged decisions themselves and issuing directives to DiMondo and Licciardi as to how to proceed. "The power to give interim instructions distinguishes principals in agency relationships from those who contract to receive services provided by persons who are not agents." Restatement (Third) Agency § 1.01, comment (f)(1) (2006). Additionally, Walsh avers that the defendants instruct adjusters and vendors they retain in connection with a loss not to discuss aspects of that loss with unit owners, another indicia of control. (Def.’s Mem. SJ, Ex. B, ¶ 14.) In light of the foregoing, the defendants have failed to demonstrate the absence of a genuine issue of material fact as to whether their own decisions, communicated through their agents, or the authorized conduct of the agents themselves, created an unreasonable risk of, and foreseeably caused, the plaintiffs’ emotional distress.
See, e.g., Pl.’s Memo. Opp. SJ, Ex. D (April 24, 2012 email from CAU claims representative Kathy Casanas to DiMondo, indicating that she has reviewed the claim with Dennis Oscapinski, Property Claims Manager for CAU, and taking the position that Licciardi’s estimate is correct); id., Ex. E (April 26, 2012 CAU "Customer Notes," wherein Casanas indicates that, contrary to DiMondo’s recommendation, she will apply depreciation to estimate); id., Ex. F (April 18, 2012 status report from DiMondo to Casanas, wherein he details the state of the claim and requests that Casanas "review ... the file in its entirety and advise this adjuster accordingly regarding the next step regarding the repairs and/or claim process"); id., Ex. G (February 27, 2012 email from Oscapinski to Casanas, wherein he tells her to advise DiMondo to instruct Licciardi as to what items he should consider adding to his estimate); id., Ex. H (March 15, 2012 email from DiMondo to Casanas asking her permission to forward Licciardi’s estimate to Ranciato); id., Ex. H (DiMondo’s May 17, 2012 status report to Casanas wherein he requests that she review the ADR program proposed by the plaintiffs "and advise whether or not we should proceed regarding same"); id., Ex. J (March 20, 2012 status report from DiMondo to Casanas, relaying his statement to Ranciato that "CAU has authorized our meeting based on limiting the discussion to scope only, not pricing"); id., Ex. K (June 21, 2012 email from Ranciato to DiMondo memorializing telephone conversation between the two, during which DiMondo told Ranciato that he had forwarded Ranciato’s correspondence to CAU, that CAU’s response was to tell Ranciato that the claim was being reviewed by CAU’s counsel and that DiMondo was "being taken out of the loop and [didn’t] have authority to move forward"); id., Ex. M (April 18, 2012 CAU "Customer Notes," indicating that Oscapinski would decide issue with plaintiffs’ bathroom that DiMondo had described); id., Ex. N (July 26, 2012, CAU "Customer Notes" indicating "that [CAU Executive Adjuster] William Walsh and ... Licciardi have done a reinspection of the property with regard to the claims being made by [Ranciato]"); id., Ex. O (June 25, 2012 letter from Seth Weinstein, counsel for QBE to Ranciato relaying QBE’s position that Licciardi’s estimate constituted the whole loss and damage covered under its policy and that QBE would not agree to mediation); id., Ex. P (January 27, 2012 email from DiMondo to the Association’s property manager, stating that his "office represents the interest of CAU" and referring to Licciardi/Accurate as "our contractor"); id., Ex. Q (June 5, 2012 letter from DiMondo to Ranciato, stating that his "office represents the interest of [CAU]" and that documents provided by Ranciato had been submitted to CAU "for review and consideration," and relaying CAU’s position as to coverage); id., Ex. S (May 7, 2012 letter from Ranciato to DiMondo indicating that DiMondo was awaiting CAU’s decision on alternative dispute resolution; July 11, 2012 letter from Ranciato to DiMondo referring to Accurate as "QBE’s expert" who suggested a scope of work "on behalf of QBE").
For example, it appears that the defendants’ own employees decided to apply a depreciation deduction to the adjusters’ estimate and to decline the plaintiffs’ invitation to participate in alternative dispute resolution. See footnote 11 of this memorandum.
The defendants’ next claim is that, pursuant to the law governing independent insurance adjusters, DiMondo and Licciardi owed no duty to the plaintiffs and, therefore, no breach of duty on their part can be imputed from them to the defendants. However, the line of cases on which the defendants rely involve claims brought by insured parties against the adjusters themselves, and not against insurers based on their adjusters’ conduct. See LaFever v. Cambridge Mutual Fire Ins. Co., Superior Court, judicial district of New London, Docket No. CV15-6023771S (June 9, 2016) (62 Conn.L.Rptr. 505); Grossman v. Homesite Ins. Co., Superior Court, judicial district of Stamford-Norwalk, Docket No. CV07-5004413S (July 6, 2009) (48 Conn.L.Rptr. 160); see also 14 Couch on Insurance (3d ed.) § 208:10 ("[I]nvestigators and adjusters working under contract for the insurer are, for the most part, not considered to have sufficient ... duty to the insured to be directly and personally liable to the insured"). The underlying rationale of these cases is that, when investigating or assessing the insured parties’ claims, independent adjusters are acting on behalf of the insurers who have hired them. Pursuant to the law of agency, such an adjuster owes "a duty of absolute loyalty ... to its employer, the insurer," and "[c]reating a separate duty to the insured would thrust the adjuster into what could be an irreconcilable conflict between such duty and the adjuster’s contractual duty to follow the instructions of its client, the insurer." Meineke v. GAB Business Services, Inc., 195 Ariz. 564, 567-68, 991 P.2d 267 (Ariz.Ct.App. 1999). Recognizing this conflict and declining to impose an additional duty of care toward the insured upon an independent adjuster as a matter of public policy, several courts have noted that insured parties are not without a remedy for the tortious conduct of independent adjusters. Specifically, an insured who is wronged by an independent adjuster still may pursue an action against the insurer, in which the acts of the adjuster will be imputed to the insurer. See Sanchez v. Lindsey Morden Claims Services, Inc., 72 Cal.App.4th 249, 253-54, 84 Cal.Rptr.2d 799 (1999); Charleston Dry Cleaners v. Zurich American Ins. Co., 355 S.C. 614, 619, 586 S.E.2d 586 (2003); Hamill v. Pawtucket Mutual Ins. Co., 179 Vt. 250, 256-57, 892 A.2d 226 (2005). "If the [independent] adjuster mishandles the claim, the insurer has the same liability to the insured as if an employee of the insurer had mishandled the claim." Meineke v. GAB Business Services, Inc., supra, 568.
Similarly, public adjusters are hired by, and act as agents of, insured parties. Chubb & Son, Inc. v. Consoli, 283 A.D.2d 297, 726 N.Y.S.2d 398 (2001).
As the foregoing demonstrates, an independent adjuster’s lack of duty to an insured party does not preclude the insured party from suing the insurer, for whom the adjuster works, for the adjuster’s allegedly tortious conduct. This is the precise dynamic of the instant case, wherein the plaintiffs claim that DiMondo and Licciardi are the defendants’ agents, and have produced evidence in that regard sufficient to defeat summary judgment. In such an action, it is the authorized conduct of the adjuster, as an agent, that is imputed to the insurer, its principal, and not, as the defendants argue, the adjuster’s duty (or lack thereof). In other words, the insurer may be held to have breached its own duty of care via the authorized acts of its adjuster. See Restatement (Third) Agency § 7.04 (2006) ("A principal is subject to liability to a third party harmed by an agent’s conduct when the agent’s conduct is within the scope of the agent’s actual authority or ratified by the principal; and ... the agent’s conduct, if that of the principal, would subject the principal to tort liability." [emphasis added] ).
The defendants’ final argument regarding the negligent infliction of emotional distress claims is that they owed the plaintiffs no duty during the claim settlement process because the plaintiffs were not named insureds on the policy covering their unit. Although there are cases holding that a third-party claimant to the proceeds of a liability insurance policy (i.e., a party injured by the acts of one insured under the policy), as a nonparty to the insurance contract, is not owed any duty by the insurer that would support an action in negligence; see, e.g., Banatoski v. Sheridan, Superior Court, Docket No. CV97-0483809S (September 17, 1998) (23 Conn.L.Rptr. 344); Decormier v. Grange Mutual Casualty Co., Superior Court, judicial district of New London, Docket No. CV93-525835 (October 18, 1993) (10 Conn.L.Rptr. 258); it already has been determined that the plaintiffs in this case are intended third-party beneficiaries of the policy at issue who possess standing to enforce its provisions. See p. 6 and id., n.4, supra . Accordingly, the cited cases are readily distinguishable. In any event, the defendants’ reasoning, i.e., that the nonexistence of a contractual duty compels a finding that there also is no duty in tort is questionable, as the sources of the two duties are separate and distinct. "An action in contract is for the breach of a duty arising out of a contract; an action in tort is for a breach of duty imposed by law." Gazo v. Stamford, 255 Conn. 245, 263, 765 A.2d 505 (2001); see, e.g., id., 250 (snow removal contractor owed duty of care to plaintiff, who fell on icy sidewalk, although plaintiff was neither party to snow removal contract nor third-party beneficiary thereof); Shenkman-Tyler v. Central Mutual Ins. Co., 126 Conn.App. 733, 744-45, 12 A.3d 613 (2011) (plaintiff, who had no interest in property or rights under policy that insured it, had standing to pursue claim of negligent infliction of emotional distress against insurer in connection with its handling of claim for coverage for damage to property). In this context, the issue of duty turns mainly on the foreseeability of the defendants’ conduct that caused the plaintiffs’ emotional distress. See Sic v. Nunan, 307 Conn. 399, 407, 43 A.3d 553 (2012) ("The ultimate test of the existence of the duty to use care is found in the foreseeability that harm may result if it is not exercised"). It should be noted that the defendants have not argued that the plaintiffs’ emotional distress was unforeseeable as a matter of law or that no duty should be imposed in these particular circumstances for reasons of public policy. See id., 407-08.
For the foregoing reasons, the defendants’ Motion for Summary Judgment on counts III through VI of the operative complaint is hereby denied. The defendants failed to demonstrate the absence of a genuine issue of material fact and that they are entitled to judgment as a matter of law.
B) CUTPA/CUIPA Claims
The defendants claim that summary judgment is warranted on counts VII and VIII of the operative complaint, which contain the plaintiffs’ claims asserting CUTPA/CUIPA violations pursuant to General Statutes § 38a-816(6). The defendants argue that § 38a-816(6) contemplates unfair claim settlement practices that occur with such frequency as to be general business practices of a defendant and that, in this case, there is no indication that the acts complained of were anything but an isolated occurrence. They contend that the plaintiffs have presented only conclusory allegations of general business practices unsupported by any evidence. In support of their claim that summary judgment is warranted on these counts, the defendants point to a portion of Edward O’Connor’s June 20, 2017 deposition testimony where he admitted that he had "nothing in writing that would support [his] belief," or any other evidence, that the actions at issue were general business practices of the defendants or represented a philosophy that they imparted to their adjusters, or that similar actions occurred during the defendants’ adjustment of any claims other than his own. (Def.’s Memo in Support of Summary Judgment at 16-22; Id., Ex. D, p. 110-11 of transcript.) The plaintiffs respond that the defendants have not met their burden of producing evidence that negates the plaintiffs’ CUTPA/CUIPA claims. Specifically, the defendants have provided no evidence as to their own business practices, and such evidence is in their exclusive possession.
See footnote 3 of this memorandum.
"[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." Lees v. Middlesex Ins. Co., 229 Conn. 842, 847-48, 643 A.2d 1282 (1994). Through this requirement, "the legislature has manifested a clear intent to exempt from coverage under CUIPA isolated instances of insurer misconduct." Id., 849; see also Mead v. Burns, 199 Conn. 651, 659, 509 A.2d 11 (1986). "[I]mproper 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)." Lees v. Middlesex Ins. Co., supra, 849. A CUTPA claim based on a violation of § 38a-816(6) similarly requires a showing of a general business practice. Id., 850. 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." State v. Acordia, 310 Conn. 1, 31, 73 A.3d 711 (2013).
CUIPA itself does not authorize a private right of action. Artie’s Auto Body, Inc. v. Hartford Fire Ins. Co., 317 Conn. 602, 623, 119 A.3d 1139 (2015). Nevertheless, a private party may bring an action under CUTPA for alleged violations of CUIPA. Id. "In order to sustain a CUIPA cause of action under CUTPA, a plaintiff must allege conduct that is proscribed by CUIPA." (Internal quotation marks omitted.) Id., 623-24.
Edward O’Connor’s June 2017 deposition testimony that he had no evidence that the conduct of the defendants forming the basis of this action is representative of their general business practices is insufficient to support summary judgment in the defendants’ favor on the CUTPA/CUIPA counts. First, regardless of the import of the testimony, there are two plaintiffs in this case who together have alleged the CUTPA/CUIPA counts. The defendants have not explained why any admission on Edward O’Connor’s part should be binding on Eileen O’Connor.
Second, Edward O’Connor’s statement does not truly establish the lack of a genuine issue of material fact regarding the defendants’ business practices. A party’s admission that he presently has no evidence bearing on a particular factual proposition is distinguishable from an admission as to the truth or falsity of that factual proposition, and it is only the latter that should support the entry of summary judgment. See Mott v. Wal-Mart Stores East, LP, 139 Conn.App. 618, 628, 57 A.3d 391 (2012) (concluding, in premises liability action, that defendant’s assertion, that plaintiff could not offer any evidence of defendant having actual or constructive notice of defect at issue, was insufficient to warrant summary judgment); id., 632 ("Even assuming that the plaintiff faces a difficult challenge in ultimately proving its case at trial, that assumption cannot form the basis for granting a motion for summary judgment"). Because Edward O’Connor has no personal knowledge regarding the defendants’ general business practices, he is not competent to make an admission regarding those practices. Notably, the defendants, who are privy to their own business practices, have not submitted any affidavits from their employees or officers attesting that the acts and omissions at issue were isolated occurrences rather than the result of common company practice. If Edward O’Connor’s affidavit, the only evidence provided by the defendants in support of their claim for summary judgment, does not serve to negate the plaintiffs’ claims regarding the defendants’ general business practices, there is no obligation that the plaintiffs submit any countervailing evidence to avoid summary judgment.
"It is frequently stated in Connecticut’s case law that, pursuant to Practice Book § § 17-45 and 17-46, a party opposing a summary judgment motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact ... [T]ypically [d]emonstrating a genuine issue requires a showing of evidentiary facts or substantial evidence outside the pleadings from which material facts alleged in the pleadings can be warrantably inferred ... "An important exception exists, however, to the general rule that a party opposing summary judgment must provide evidentiary support for its opposition ... On a motion by [the] defendant for summary judgment, the burden is on [the] defendant to negate each claim as framed by the complaint ... It necessarily follows that it is only [o]nce [the] defendant’s burden in establishing his entitlement to summary judgment is met [that] the burden shifts to [the] plaintiff to show that a genuine issue of fact exists justifying a trial ... Accordingly, [w]hen documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue." (Internal quotation marks omitted.)
III
CONCLUSION
The court hereby denies the defendants’ Motion for Summary Judgment in its entirety.
Barbee v. Sysco Connecticut, LLC, 156 Conn.App. 813, 818-19, 114 A.3d 944 (2015).