Opinion
No. CV 10 6005268
January 6, 2011
MEMORANDUM OF DECISION RE MOTION STRIKE (NO. 102)
The defendant moves to strike counts two, three and four of the plaintiff's complaint. The plaintiff approved the motion to strike count two, but did not brief her opposition to the motion to strike counts three and four. For the reasons stated below, the court grants the defendant's motion to strike.
FACTS
On July 20, 2010, the plaintiff, Melissa Blayman, commenced this action by service of process on the defendant, Allstate Insurance Co. The plaintiff's complaint alleges the following facts. The defendant insured the plaintiff for any personal injuries that she might sustain due to the negligent operation of a motor vehicle by an uninsured or underinsured motorist. On December 29, 2007, the plaintiff was involved in a head on collision with another motor vehicle and as a result of that collision suffered various injuries. The driver of the other vehicle involved in the accident was negligent in various ways As a result of the accident, the plaintiff incurred medical bills, lost wages and suffered from a diminished earning potential. On September 30, 2009, the plaintiff resolved her claim against the other driver when the other driver's insurer paid the plaintiff the limit under its policy, $20,000.
In addition to the counts at issue in this motion to strike, the plaintiff's complaint also alleges, in count one, that the defendant is liable to the plaintiff under the underinsured motorist policy in effect between the plaintiff and defendant at the time of the accident. The defendant does not challenge the legal sufficiency of count one.
Count two of the plaintiff's complaint, the count for breach of the covenant of good faith and fair dealing, alleges the following further facts. Before October 13, 2009, the plaintiff provided the defendant notice of the $20,000 settlement with the tortfeasor's insurance company and also provided evidence of her medical bills. On June 29, 2010, a claims representative of the defendant offered the plaintiff $1,500 for full and final settlement of her case, stating that there was no room for negotiation. Count two of the plaintiff's complaint alleges that those actions violated the implied covenant of good faith and fair dealing.
Count three of the plaintiff's complaint, the count for a violation of the Connecticut Unfair Insurance Practices Act (CUIPA), alleges the following additional facts. The plaintiff was entitled to coverage under the underinsured motorist portion of her policy. The policy provides up to $80,000 in coverage. The plaintiff incurred $17,000 in medical bills and $6,000 in lost wages. The defendant is unwilling to negotiate a settlement in good faith. Count three of the plaintiff's complaint alleges that those actions constitute a violation of CUIPA.
Count four of the plaintiff's complaint, the count for a violation of the Connecticut Unfair Trade Practices Act (CUTPA), does not allege any additional facts. It alleges that the defendant's actions were a violation of CUTPA because they were "immoral, unethical, oppressive, unscrupulous, offend public policy, and caused substantial injury to consumers including the plaintiff."
On October 12, 2010, the defendant moved to strike counts two, three and four of the plaintiff's complaint on the grounds that count two fails to allege conduct on the part of the defendant that constitutes bad faith, count three and four fail to allege a general business practice on the part of the defendant, and that CUIPA does not create a private cause of action. The defendant filed a memorandum in support of its motion to dismiss on the same day. On November 1, 2010, the plaintiff filed an objection to the defendant's motion to dismiss and an accompanying memorandum of law in opposition. The court took the matter on the papers on November 22, 2010.
ANALYSIS
"[A] party may challenge the legal sufficiency of an adverse party's claim by filing a motion to strike." Vertex, Inc. v. Waterbury, 278 Conn. 557, 564, 898 A.2d 178 (2006). "We take the facts to be those alleged in the complaint that has been stricken and we construe the complaint in the manner most favorable to sustaining its legal sufficiency . . . Thus [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Moreover, we note that [w]hat is necessarily implied [in an allegation] need not be expressly alleged . . . It is fundamental that in determining the sufficiency of 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 . . . Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 295 Conn. 240, 252-53, 990 A.2d 206 (2010). "A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).
The defendant argues that the court should strike counts two, three and four because they are not legally sufficient to sustain a cause of action. As to count two, the defendant argues that a low settlement offer does not rise to the level of a breach of the implied covenant of good faith and fair dealing. It argues: "A difference of opinion as to the value of an [underinsured motorist] claim does not constitute dishonest or sinister motive on either side's part." The defendant argues that the plaintiff has not alleged any facts that support a finding of a sinister motive or dishonest purpose on the part of the defendant.
As to count three, the defendant argues that the plaintiff has not pled a pattern or practice on the part of the defendant as required under CUIPA. Furthermore, as to count three, the defendant argues that CUIPA does not create a private right of action and that, therefore, the plaintiff does not have a right of action against the defendant. As to count four, the defendant argues that if the plaintiff's claim fails as to count three, then count four must also fail.
The plaintiff counters that, as to count two, a complaint for a violation of the covenant of good faith and fair dealing need only allege willful conduct in order to state a claim, and that the defendant's bad faith may be inferred from the allegations of the complaint. The defendant waited eight months to offer a settlement, and that ultimate settlement offer, for $1,500, was less than the $3,000 she claims to be entitled to from the defendant. The plaintiff's objection and memorandum in opposition to the motion to strike do not address the defendant's arguments regarding counts three and four.
A. Count Two: Bad Faith
The plaintiff's second count alleges that the defendant breached the implied covenant of good faith and fair dealing by its settlement offer. "The relevant legal principles are well established. [I]t is axiomatic that the . . . duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship . . . In other words, every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement . . . The covenant of good faith and fair dealing presupposes that the terms and purpose of the contract are agreed upon by the parties and that what is in dispute is a party's discretionary application or interpretation of a contract term . . . To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith . . .
"Bad faith has been defined in our jurisprudence in various ways. 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 . . . [B]ad faith may be overt or may consist of inaction, and it may include evasion of the spirit of the bargain . . ." (Citations omitted; internal quotation marks omitted.) Keller v. Beckenstein, 117 Conn.App. 550, 563-64, 979 A.2d 1055, cert. denied, 294 Conn. 913, 983 A.2d 274 (2009).
"[T]here is a split of authority among Superior Courts as to what factual allegations are sufficient to constitute the element of bad faith . . . The first line of cases requires specific allegations establishing a dishonest purpose or malice. In alleging a breach of the covenant of good faith and fair dealing, courts have stressed that such a claim must be alleged in terms of wanton and malicious injury [and] evil motive . . . The second line of cases generally holds parties to a less stringent standard requiring that a plaintiff need only allege sufficient facts or allegations from which a reasonable inference of sinister motive can be made . . . Even where courts have used an inference analysis, however, they have looked to allegations that the conduct at issue was engaged in purposefully." (Internal quotation marks omitted.) Seven Oaks Partners, LP v. Vigilant Ins. Co., Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 09 5012672 (July 7, 2010, Adams, J.).
For example, in Liquore v. Assurance Co. of America, Superior Court, complex litigation docket at Norwich, Docket No. X04 CV 01 1234151 (March 19, 2002, McLachlan, J.), the court ruled: "The alleged failure to act with reasonable promptness, failure to explain the basis of its failure to cover the claim under the policy and failure to defend and indemnify are simply claims that the defendant denied the plaintiff's claim for benefits under the policy. Such allegations are insufficient to sustain a claim of bad faith." See also Crespan v. State Farm Mutual Auto Ins. Co., Superior Court, judicial district of Litchfield, CV 05 4002121 (January 12, 2006, Pickard, J.) (granting the defendant's motion to strike the plaintiff's claim for breach of the covenant of good faith and fair dealing because: "Though the plaintiff has made allegations which, if proven, may show that the defendant did not fulfill its insurance contract with the plaintiff, the allegations that the plaintiff has made . . . would not, if proven, show any dishonest purpose or sinister motive on the part of the defendant"); New England Fertility Institute v. CNA Commercial Ins. Co., Superior Court, complex litigation docket at Stamford, Docket No. X08 CV 00 0181244 (June 10, 2003, Adams, J.) ("[t]he failure to make insurance payments, by itself, does not establish a claim for lack of good faith"); Grant v. Colonial Penn Ins. Co., Superior Court, judicial district of Fairfield, Docket No. CV 95 321277 (January 16, 1996, Hauser, J.) ( 16 Conn. L. Rptr. 49, 51) (ruling that a plaintiff must allege more than a mere denial of benefits to sustain a claim for breach of the covenant of good faith and fair dealing); McCrea v. Louis Dreyfus Corp., Superior Court, judicial district of Danbury, Docket No. CV 0316358 (September 28, 1994, Stodolink, J.) ( 12 Conn. L. Rptr. 493, 494) ("The mere allegation that the defendant `willfully' failed to perform certain obligations pursuant to contract is insufficient to support [a claim for breach of the covenant of good faith and fair dealing]").
Conversely, in Algiere v. Utica National Ins. Co., Superior Court, judicial district of New London, Docket No. CV 04 5069670 (February 7, 2005, Jones, J.), the court denied a defendant insurance company's motion to strike where the plaintiff did not allege that the defendant acted with a sinister motive. The court reasoned: "Although the plaintiff has not alleged that the defendant acted in bad faith or with a sinister motive she has alleged facts sufficient to reasonably infer that an improper motive or reckless indifference of the interest of others existed. The plaintiff has alleged that the defendant has knowingly, willfully, deliberately and repeatedly ignored the workers' compensation commission orders; such continued defiance is unlikely to be attributable to an honest mistake or mere negligence." See also Morin v. Tracy, Driscoll Co., Superior Court, judicial district of Hartford, Docket No CV 03 0823241 (May 26, 2004, Sheldon, J.) ("Plainly, taking money from an unwitting client for the procurement of a patently worthless insurance policy, with full knowledge of the nature and significance of the omissions from the client's application which make it worthless, is dishonest, whatever its motive. There can be no doubt that such conduct, if pleaded and proved at trial, is sufficient to establish that the defendant broker acted in bad faith when completing and submitting the client's insurance application"); McGill v. Mutual of Omaha Ins. Co., Superior Court, complex litigation docket at Middletown, Docket No. X04 CV 04 0104343 (September 28, 2004, Quinn, J.).
In this case, regardless of whether the court adopts the more stringent standard, requiring the plaintiff to allege specific facts showing a sinister motive, or the more lenient standard, inferring bad faith from the defendant's willful acts, the plaintiff's complaint is legally insufficient to state a claim for a breach of the covenant of good faith and fair dealing. The plaintiff's complaint does not meet the more stringent standard because it does not contain specific allegations establishing a dishonest purpose or malice. Indeed, the plaintiff's complaint fails to allege any facts with respect to the defendant's motivation for making its settlement offer.
The plaintiff's complaint also fails under the more lenient standard because, even examining the plaintiff's allegations in the light most favorable to sustaining their legal sufficiency, they are insufficient to infer a sinister motive. Like the plaintiffs in Algiere and Morin, the plaintiff in this case fails to specifically allege facts tending to show that the defendant acted with sinister motive. Unlike the allegations in those cases, however, the plaintiff's complaint in this case merely alleges that the plaintiff incurred $23,000 medical expenses and lost wages from the car accident, that the tortfeasor's insurer paid her $20,000, and that the defendant offered her $1,500 for full settlement of her underinsured motorist claim. These facts are insufficient to infer a sinister, malicious or evil motive on the part of the defendant.
B. Count Three: Violation of CUIPA CT Page 2410
The plaintiff's third count alleges a violation of CUIPA. General Statutes § 38a-815 provides, in relevant part: "No person shall engage in this state in any trade practice which is defined in Section 38a-816." Section 38a-816 defines twenty-two types of unfair trade practices, including § 38a-816(6), which relates to unfair claim settlement practices. That subsection prohibits: "Committing or performing with such frequency as to indicate a general business practice any of the following," and enumerates fifteen categories of prohibited claim settlement practices. The plaintiff, in count three, alleges that the defendant's acts constituted four of the prohibited claim settlement practices.
The Connecticut Supreme Court has expressly declined to rule on whether CUIPA creates a private right of action for individuals against insurers for unfair or deceptive insurance practices. See Lees v. Middlesex Ins. Co., 229 Conn. 842, 847 n. 4, 643 A.2d 1282 (1994). The majority of Superior Court decisions, however, have ruled that such a private right of action does not exist. See, e.g., Fedora v. Worcester Ins. Co., Superior Court, juridical district of New Haven, Docket No. CV 03 0285288 (September 28, 2004, Tanzer, J.); Carter v. Cambridge Mutual Fire Ins. Co., Superior Court, judicial district of Hartford, Docket No. CV 03 0824460 (September 9, 2004, Shapiro, J.); Infinity Ins. Co. v. Tompkins, Superior Court, judicial district of Hartford-New Britain at New Britain, Docket No. CV 94 0459958 (November 28, 1994, Berger, J.); but see Cirrito v. Crawford Co., Superior Court judicial district of New Haven, Docket No. CV 01 0456052 (December 24, 2002, Zoarski, J.T.R.).
Regardless of whether CUIPA creates a private right of action, § 38a-816(6) only prohibits unfair claim settlement practices if those practices were committed or performed "with such frequency as to indicate a general business practice." Lees v. Middlesex Ins. Co., supra, 229 Conn 849. In Lees, the Connecticut Supreme Court examined a plaintiff's allegation that an insurance company had engaged in unfair claim settlement practices, and ruled: "In requiring proof that the insurer has engaged in unfair claim settlement practices `with such frequency as to indicate a general business practice,' the legislature has manifested a clear intent to exempt from coverage under CUIPA isolated instances of insurer misconduct . . . The gravamen of the plaintiff's claim is that the defendant unfairly failed to settle her claim, and her claim alone. We conclude that the 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)." (Citation omitted.) Lees v. Middlesex Ins. Co., supra, 849.
In this case, the plaintiff, just like the plaintiff in Lees alleges that the defendant unfairly failed to settle her claim, and her claim alone. Those allegations are legally insufficient to state a claim under CUIPA on which relief can be granted.
C. Count Four: Violation of CUTPA
"[T]he legislature has manifested an intention to make insurance practices the subject of two regulatory statutes, CUIPA and CUTPA." Mead v. Burns, 199 Conn. 651, 663, 509 A.2d 11 (1986). In Lees v. Middlesex Ins. Co., supra, 229 Conn. 851, the Supreme Court ruled: "Because the plaintiff's evidence was insufficient to satisfy the requirement under CUIPA that the defendant's alleged unfair claim settlement practices constituted a `general business practice,' the plaintiff's CUTPA claim could not survive the failure of her CUIPA claim." Therefore, while it is possible for a plaintiff to assert a CUTPA claim against an insurer without also stating a claim for a violation of CUIPA; see Mancini Construction Co. v. Construction Management International, LLC, Superior Court, Complex Litigation Docket at New Britain, Docket No. X03 CV 02 0524008 (August 17, 2004, Peck, J.) ( 37 Conn. L. Rptr. 723, 723); the failure of a plaintiff's CUIPA claim for failure to allege a "general business practice" is fatal to a related CUTPA claim. Lees v. Middlesex Ins. Co., supra, 851.
In this case, the plaintiff's CUIPA claim fails because it does not allege a "general business practice." That failure is also fatal to her CUTPA claim under Lees.
CONCLUSION
The court grants the defendant's motion to strike counts one, two, three and four. As to count two, the plaintiff fails to allege facts from which a sinister motive on the part of the defendant could be inferred. As to count three, the plaintiff fails to allege conduct on the part of the defendant that would rise to the level of a general business practice, as required under CUIPA. Finally, as to count four, the plaintiff's CUTPA claim cannot survive the failure of her CUIPA claim in count three.