Opinion
No. HHB-CV09-5013886S
March 12, 2010
MEMORANDUM OF DECISION RE GOODMAN'S MOTION TO STRIKE #103
1. History and Nature of the Proceedings
The plaintiffs, Donald Plumber and Don's Roofing, LLC, filed a complaint against the defendants, Goodman Insurance, Inc. (Goodman) and Maxum Indemnity Co. (Maxum), alleging a violation of General Statutes § 38a-816(1)(a) of the Connecticut Unfair Insurance Practices Act (CUIPA) in two separate counts against each defendant. Specifically, the complaint alleges the following facts: The plaintiffs, who are engaged in the business of residential roofing, hired Goodman to obtain insurance to cover the risks associated with that business. Goodman initially obtained a one-year policy for the plaintiffs from Maxum, which provided the necessary coverage. The plaintiffs made timely premium payments on this policy for the duration of the coverage period and at the end of the year, hired Goodman to renew this same coverage. Goodman renewed the policy, but unbeknownst to the plaintiffs, the policy now contained a new endorsement, which excluded from coverage under the policy any claim for injury related to the type of roofing work that the plaintiffs conducted. Believing the policy to have the same coverage, the plaintiffs paid the policy premiums and at the period's end once again renewed the policy containing the endorsement for another year — June 2, 2006 through June 2, 2007 — and continued to pay premiums.
The relevant portions of the statute provides:
The following are defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:
(1) Misrepresentations and false advertising of insurance policies. Making, issuing or circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement, sales presentation, omission or comparison which: (a) Misrepresents the benefits, advantages, conditions or terms of any insurance policy;
The complaint alleges that Goodman procured this insurance by dealing with a third party broker, S.H. Smith and Company (Smith), and that Smith obtained the insurance from Maxum. Smith was not a named party to this action, and, therefore, does not appear.
During coverage period of June 2, 2006 — June 2, 2007, Kevin Blakeman, a third party, was allegedly injured as a result of a fall from a roof that the plaintiffs had previously worked on and brought suit against the plaintiffs. Maxum disclaimed coverage for this accident pursuant to the language of the endorsement. Had the plaintiffs been aware of this endorsement, the plaintiffs would not have engaged in the project. As a result, the plaintiffs allege in count one that Goodman is liable for a violation of CUIPA, § 38a-816(1)(a) because it misrepresented the coverage of the policy. Furthermore, in count two, the plaintiffs allege that Maxum is also liable for a violation of the same section of CUIPA.
Goodman then filed the present motion to strike count one — the only count targeted at Goodman. The plaintiffs then filed an objection to the motion to strike (#104). Maxum, however, chose to file an answer to the plaintiffs' complaint and, therefore, has no interest in this motion. After an extensive review of the court file, in particular, the allegations contained in the plaintiff's complaint, the memoranda and accompanying documents filed by each of the parties, the cases cited by each and giving due consideration to the arguments of counsel, the court will, for reasons hereinafter stated, deny Goodman's motion to strike.
II. Motion to Strike
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498 (2003). "A motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court." (Internal quotation marks omitted.) Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 771 (2002). "A motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Emphasis in original; internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 588 (1997). The role of the trial court in ruling on a motion to strike is "to examine the [complaint], construed in favor of the [plaintiff], to determine whether the [pleading party has] stated a legally sufficient cause of action." (Internal quotation marks omitted.) Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378 (1997). "Thus, [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 [or a count in a complaint] challenged by a defendant's motion to strike, all well pleaded facts and those facts necessarily implied from the allegations are taken as admitted." Doe v. Board of Education, 76 Conn.App. 296, 299-300 (2003).
III. Private Cause of Action Under CUIPA
The plaintiffs argue that Goodman has violated CUIPA because Goodman should have known about the existence of the changes to the policy, should have brought it to the plaintiffs' attention, and because it failed to inform the plaintiffs of the changes, in effect, misrepresented the coverage of the policy to the plaintiffs. The plaintiffs further argue that Goodman knew that the plaintiffs only desired insurance in order to cover the roofing business and misrepresented that the policy containing the endorsement would provide coverage for the plaintiffs' business activities when, in fact, it did not.
In its motion to strike, Goodman argues that the plaintiffs are barred from bringing a private cause of action pursuant to CUIPA. In support, Goodman cites Palmier v. Nationwide Mutual Ins. Co., Superior Court, judicial district of Fairfield, Docket No. CV 07 5012326 (January 28, 2009, Tobin, J.) wherein a private individual brought a claim against his insurance company for verbally representing it would provide a certain policy limit and then refusing to honor this representation by citing to the policy terms. Id. The court applied the traditional three-part test of determining whether a private cause of action could be inferred when not expressly provided for in a statute. Rollins v. People's Bank Corp., 283 Conn. 136, 142 (2007). Specifically, the court asked "First, is the plaintiff one of the class for whose . . . benefit the statute was enacted . . . ? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? . . . Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff?" (Internal quotation marks omitted.) Palmier v. Nationwide Mutual Ins. Co., supra, Superior Court, Docket No. 07 5012326, citing Rollins v. People's Bank Corp., supra, 283 Conn. 142. Based on this test and the findings of other Superior Court opinions, the court found "1) there is no express authority under CUIPA for private causes of action; 2) CUIPA is not ambiguous; 3) the regulatory scheme under CUIPA contemplates investigation and enforcement actions to be taken by the insurance commissioner; and 4) consequently there is no private cause of action under CUIPA." Id.
The plaintiffs object to Goodman's argument stating that a private cause of action under CUIPA is permissible when brought pursuant to the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., which the plaintiffs have done in this case.
Specifically, the plaintiffs argue that because a claim for a violation for CUIPA cannot stand alone, it must be brought pursuant to CUTPA, which permits a private cause of action. In support, the plaintiff cites to Selle v. Geico General Ins. Co., Superior Court, judicial district of New Haven, Docket No. CV 04 4000567 (March 29, 2005, Tanzer J.) and Fedora v. Worchester Ins. Co., Superior Court, judicial district of New Haven, Docket No. CV 03 0285288 (September 28, 2004, Tanzer, J.). In each of these cases, while the courts agreed that "[a]lthough the CUIPA violations alleged by the plaintiff cannot stand on their own, CUTPA authorizes private causes of action to enforce claims derived from CUIPA." Fedora v. Worchester Ins. Co., supra.
The Supreme Court has held that "a private cause of action exists under CUTPA to enforce alleged CUIPA violations." Lees v. Middlesex Ins. Co., 219 Conn. 644, 654 (1991). "Our jurisprudence regarding CUTPA is well settled. It is remedial in character . . . and must be liberally construed in favor of those whom the legislature intended to benefit." (Internal quotation marks omitted.) Eder Bros., Inc v. Wine Merchants of Connecticut, Inc., 275 Conn. 363, 379 (2005). "A CUTPA claim may be brought in the superior court by [a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act or practice prohibited by section 42-110b . . ." (Internal quotation marks omitted.) Id., 380.
The plaintiffs have titled count one as a violation of CUIPA as against Goodman. The language of this count, however, includes allegations that Goodman violated § 42-110b, the operative section of CUTPA, by "misrepresenting the benefits, advantages, conditions or terms of the insurance policy it procured for the plaintiffs . . ." Complaint, ¶¶ 12-13. Furthermore, the plaintiffs allege that this misrepresentation caused them damages by way of defending an ongoing litigation and exposing them to potential monetary damages. Complaint, ¶ 18. While the plaintiffs' claim may indeed be titled as a violation of CUIPA, the plaintiffs have worded their complaint as an action for injuries and damages contemplated under CUTPA. Therefore, count one is properly before this court.
Sec. 42-110b provides:
(a) No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.
(b) It is the intent of the legislature that in construing subsection (a) of this section, the commissioner and the courts of this state shall be guided by interpretations given by the Federal Trade Commission and the federal courts to Section 5(a)(1) of the Federal Trade Commission Act ( 15 USC 45(a)(1)), as from time to time amended.
(c) The commissioner may, in accordance with chapter 54, establish by regulation acts, practices or methods which shall be deemed to be unfair or deceptive in violation of subsection (a) of this section. Such regulations shall not be inconsistent with the rules, regulations and decisions of the federal trade commission and the federal courts in interpreting the provisions of the Federal Trade Commission Act.
(d) It is the intention of the legislature that this chapter be remedial and be so construed.
IV. Negligent Business Acts under CUTPA
Furthermore, the defendant argues that the plaintiffs have merely alleged negligence sounding in professional malpractice whereas a claim under CUTPA requires allegations of negligent business acts. The plaintiffs, however, argue that the defendant's argument is that a single allegation of misrepresentation is insufficient to establish business practice, but that such a single allegation is sufficient to bring the plaintiffs' injury within the purview of § 38a-816(a). While the court disagrees with the plaintiffs' interpretation of the defendant's argument regarding entrepreneurial allegations, the court is disinclined to agree with the defendant's argument in favor of striking count one.
The defendant is correct that "professional malpractice does not give rise to a cause of action under CUTPA." Beverly Hills Concepts, Inc. v. Schatz Schatz, Ribcoff Kotkin, 247 Conn. 48, 79 (1998). Stated another way, "professional negligence that is, malpractice does not fall under CUTPA." Id. The Supreme Court has repeatedly applied this exception to doctors and attorneys. See Haynes v. Yale-New Haven Hospital, 243 Conn. 17, 34 (1997); Anderson v. Schoenhorn, 89 Conn.App. 666 (2005). CUTPA is only implicated against a professional "when the actions at issue are chiefly concerned with `entrepreneurial' aspects of practice, such as the solicitation of business and billing practices, as opposed to claims directed at the `competence of and strategy' employed by the . . . defendant." (Internal quotation marks omitted.) Janusauskas v. Fichman, 264 Conn. 796, 809, 826 A.2d 1066 (2003) (discussing professional malpractice in the medicine context).
While several superior court cases have extended this malpractice exception to insurance agents, several have not. This court is inclined to agree with the later. The language of Janusauskas v. Fichman, supra, 264 Conn. 809, informs the reader that the malpractice exception seeks to avoid the application of CUTPA to allegations involving "competence" and "strategy." Here, the plaintiffs have alleged that the defendant misrepresented the extent of the coverage that it supplied to the plaintiff. The plaintiffs' allegations do not indicate that the defendant is not competent to provide them with a policy containing sufficient coverage rather, they have alleged the defendant did just that for the first year the plaintiffs received coverage. Furthermore, this allegation does not insinuate that it was the defendant's strategy which produced less than desirable results. This court is not inclined to extend the malpractice exception to allegations founded upon the misrepresentation of insurance coverage, in particular, in a case such as this, in which the coverage relied upon by a commercial insured is crucial to the type of business in which the insured is engaged.
See Silk v. Cowles Connell, Superior Court, complex litigation docket at Middlesex, Docket No. X04 CV 03 103524 (May 25, 2004, Quinn, J.) ( 37 Conn. L. Rptr. 152); Krassner v. CPM Insurance Services, Superior Court, judicial district of New Haven, Docket No. CV 01 0456362 (August 8, 2002, Booth, J.) ( 32 Conn. L. Rptr. 701); Fields v. Vincent, Superior Court, judicial district of Hartford, Docket No. CV 97 0569685 (Aug. 25, 1999, Bishop, J.).
See 1049 Asylum v. Kinney Pike Ins., Superior Court, judicial district of Hartford, Docket No. CV 02 0816344 (October 26, 2005, Tanzer, J.) (on a motion for summary judgment, court upheld a claim for a violation of CUTPA against an insurance agent for misrepresenting the coverage of the policy under § 38a-816(1)(a).); H.F.M. Inc. v. American International Group, Superior Court, judicial district of Hartford, Docket No. CV 05 4013377 (August 17, 2006, Scholl, J.).
V. Cause of Action under § 38a-816(1)(a)
Lastly, the defendant argues that a claim under § 38a-816(1)(a) requiring allegations of issuing, making, or circulating the policy are better suited toward an insurance company and not an insurance broker. Considering the plaintiffs have not included allegations of issuing, making, or circulating the policy in their claim, but rather have only included allegations of misrepresentation, the defendants argue that this claim must be stricken. In response, the plaintiffs argue that an allegation for misrepresentation is appropriately brought pursuant to § 38a-816(1)(a). In support the plaintiff cites 1049 Asylum Ltd. v. Kinney Pike Ins., Inc., Superior Court, judicial district of Hartford, Docket No. CV 02 0816344 (October 26, 2005, Tanzer, J.); A A Homes v. Nationwide Mutual Fire Ins., Superior Court, judicial district of New Haven, Docket No. CV 05 4002025 (December 12, 2005, Wiese, J.).
Section 38a-816 reads in pertinent part: "The following are defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:
(1) Misrepresentations and false advertising of insurance policies. Making, issuing or circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement, sales presentation, omission or comparison which: (a) Misrepresents the benefits, advantages, conditions or terms of any insurance policy . . ." Emphasis added.
"An insurance agent has the duty to exercise reasonable skill, care and diligence to see that his client has proper coverage . . . Where he undertakes to procure a policy affording protection against a designated risk, the law imposes upon him an obligation to perform with reasonable care the duty he has assumed . . ." (Citation omitted; internal quotation marks omitted.) Dimeo v. Burns, Brooks McNeil, Inc., 6 Conn.App. 241, 244, cert. denied, 199 Conn. 805 (1986). "[S]elling insurance is a specialized field with specialized knowledge and experience, and an agent has the duties to advise the client about the kind and extent of desired coverage and to choose the appropriate insurance for the client . . . [T]he client ordinarily looks to his agent and relies on the agent's expertise in placing his insurance problems in the agent's hands." Id.
In the present case, given the court's obligation to view the allegations in the plaintiffs' complaint broadly and liberally, the plaintiffs have successfully alleged that the defendant violated CUPTA by failing to inform them of the changes subsequently made to their policy, which materially and substantially altered the coverage upon which the plaintiffs were relying. Such an omission falls within the definition of unfair under § 38a-816(1)(a) because the defendant presented the policy with the new endorsement to the plaintiffs as a policy that provided the same coverage as the previous policy, which was, in effect, a misrepresentation as to the terms of that policy. This interpretation fits squarely within the language of § 38a-816(1) requiring an action of "making . . . any . . . sales presentation [or] omission" and the language of subsection (a) further requiring that such a presentation "[m]isrepresents . . . [the] terms of any insurance policy." Furthermore, this reading is in line with the insurance agent's duty to inform its commercial customers as to the nature and extent of coverage of the policies they require for the operation of their business, policies for which the agent is collecting a premium.
While the defendant may artfully plead that this statute is intended only to apply to insurance companies and not brokers, this court is not aware of any authority to support that assertion; based on the recognized duties of an insurance agent and the interests of public policy, this court is disinclined to accept that claim. The court finds C.F. Oil, Inc. v. Corporate Risk Solutions, Superior Court, judicial district of New Britain, Docket No. CV 09 5010982 (July 16, 2009, Pittman, J.), which the defendant cites in support of its argument, distinguishable from the present action. In C.F. Oil, the plaintiff alleged that the defendants intentionally "churned policies to obtain a stream of higher fees, that the defendants caused a lapse in coverage by so doing, and that the defendants misrepresented the lapses in coverage." Id. The court found that the only possible provision of § 38a-816 that might apply was subparagraph (6), which addresses unfair settlement practices. Id. As a result, the court was not persuaded that a sufficient claim had been made. Id. The present case, however, does not involve a churning between multiple policies, but rather an alleged misrepresentation as to a fundamental change in a policy the plaintiffs wished to renew. The plaintiffs have alleged that the defendant omitted factual information concerning the new endorsement, which effectively misrepresented the coverage of the policy to the plaintiffs. These allegations fall squarely within an action anticipated by § 38a-816(1)(a).
Finally, the defendant cites Lefebvre v. Tracy Driscoll Co., Superior Court, judicial district of New Britain, Docket No. CV 02 0517796 (May 6, 2003, Cohen, J.), which addresses the requirement that an alleged act be intentional under § 38a-816(8). The court is likewise not persuaded because the court in Lefebvre examined the language of § 38a-816(1)(f) and § 38a-816(8). Considering the plaintiffs in this case have only made allegations concerning § 38a-816(1)(a), the Lefebvre analysis is inapplicable.
V. Conclusion
For the foregoing reasons, Goodman's motion to strike count one is denied.