Opinion
No. X04-CV-91-03460 S
January 28, 2005
MEMORANDUM OF DECISION RE POSTJUDGMENT MOTIONS
This lawsuit, claiming inter alia, breach of a contract of insurance and breach of the obligation of good faith and fair dealing grew out of an insurance claim filed by the plaintiffs, Mr. and Mrs. Thomas Boyd, with the Hartford Fire Insurance Company for benefits when their home under construction was destroyed by vandals on June 7, 1990. After trial was finally completed in June 2004, the jury found for the plaintiff Rose Marie Boyd against the defendant Hartford Fire Insurance Company, hereafter the Hartford, only. The jury awarded $23,630 in damages for additional living expenses under the homeowner's insurance policy and $50,000.00 on the remaining claim. The defendant the Hartford filed motions to set aside the verdict, for a new trial and for judgment notwithstanding the verdict. Each motion sets forth similar claims, arguing that the court erred because:
There were many additional counts against the Hartford Fire Insurance Company and the individually named defendants, which the jury found for the defendants.
(1) there was no evidence which could logically and legally support the verdict for the additional living expenses provisions of the policy;
(2) the plaintiff failed to establish that the company injured her right to receive benefits due her under the contract of insurance and that in doing so, it acted with ill will, malice, deceit or dishonestly;
(3) the action was time-barred by the suit limitation clause contained in the contract and should not have been allowed, or in the alternative, the court should have permitted the jury to consider the Hartford's special defense, alleging the suit limitation provision. CT Page 1692
Because the court concludes that there were facts in evidence from which the jury could reasonably have reached the conclusions its verdict reflects and for the reasons set forth in detail below, this court denies the motions.
I DISCUSSION A. Legal Standard of Review: Motions To Set Aside A Verdict; Motions for Judgment Notwithstanding the Verdict and New Trial.
"When considering a motion to set aside, the verdict, this court's function is to determine whether the evidence, viewed in the light most favorable to the prevailing party, reasonably supports the jury's verdict." (Internal quotation marks omitted.) Skrzypiec v. Noonan, 228 Conn. 1, 10, 633 A.2d 716 (1993); Preston v. Wellspeak, 62 Conn.App. 77, 81, 767 A.2d 1259 (2001). "A trial court may set aside a verdict on a finding that the verdict is manifestly unjust because, given the evidence presented, the jury mistakenly applied a legal principle or because there is no evidence to which the legal principles of the case could be applied." Card v. State, 57 Conn.App. 134, 138, 747 A.2d 32 (2000). "A verdict should not be set aside, however, where it is apparent that there was some evidence on which the jury might reasonably have reached its conclusion." (Internal quotation marks omitted.) Kurti v. Becker, 54 Conn.App. 335, 337, 733 A.2d 916, cert. denied, 251 Conn. 909, 739 A.2d 1248 (1999).
"Before determining whether the granting of a motion to set aside is proper, the trial court must look at the relevant law that it gave the jury to apply to the facts, and at the facts that the jury could have found based on the evidence. The law and evidence necessarily define the scope of the trial court's legal discretion . . . This discretion vested in the trial court is not an arbitrary or capricious discretion, but rather, it is legal discretion to be exercised within the boundaries of settled law . . . This limitation on a trial court's discretion results from the constitutional right of litigants to have issues of fact determined by a jury . . . The trial court, upon a motion to set aside the verdict, is called on to question whether there is a legal reason for the verdict and, if there is not, the court must set aside the verdict." (Citations omitted; internal quotation marks omitted.) Suarez v. Sordo, 43 Conn.App. 756, 759-60, CT Page 1693 685 A.2d 1144 (1996), cert. denied, 240 Conn. 906, 688 A.2d 334 (1997).
The standards governing a motion for judgment notwithstanding the verdict are the same as those governing a motion for a directed verdict, because a motion for judgment notwithstanding the verdict is not a new motion but the renewal of a motion for a directed verdict. Gagne v. Vaccaro, 255 Conn. 390, 400, 766 A.2d 416 (2001). In considering a motion for judgment notwithstanding the verdict the court must "consider the evidence, and all inferences that may be drawn from the evidence, in a light most favorable to the party that was successful at trial . . . Judgment notwithstanding the verdict should be granted only if [the court finds] that the jurors could not reasonably and legally have reached the conclusion that they did reach . . . If the jury, however, without conjecture could not have found established an element of the claim, the verdict on the claim cannot withstand a motion for judgment notwithstanding the verdict . . . Consequently, the plaintiff must produce sufficient evidence to remove the jury's function from the realm of speculation." Craine v. Trinity College, 259 Conn. 625, 635-36, 791 A.2d 518 (2002).
B. Factual Background
As noted, the plaintiffs, Mr. and Mrs. Thomas Boyd, filed an insurance claim with the Hartford for benefits when their home under construction was destroyed by vandals on June 7, 1990. The premises were insured by a policy of insurance with the defendant, although the residence was not yet occupied by the Boyds. Less than a year after the loss, the Boyds commenced suit for damages, which suit was subsequently stayed when the Hartford, in a separate suit, moved to compel the arbitration (appraisal) process set forth in the policy. Ultimately, the appraisers awarded damages in the amount of $329,000, which amount was paid by the Hartford. The arbitration award was confirmed by the court and never challenged by the plaintiffs.
This court subsequently determined that the bulk of the damages for the value of the destroyed home sought by the plaintiffs in the case at bar had been previously conclusively determined by the appraisers in the separate suit to compel arbitration. The plaintiff was therefore collaterally estopped from asserting those same claims in the present lawsuit. Further, the court determined that any damages for breach of contract in this case were limited to matters expressly exempted from the appraisal process by the appraisers. When the matter finally was reached for trial, Mr. Boyd was no longer a plaintiff and the breach of contract claim was limited to that portion of the insurance policy providing coverage for additional living expenses incurred because of the loss of the use of the residence, since the appraisers had specifically stated that this item was not included within their damages assessment.
C. Defendant's Claims 1) Breach of Contract — The additional living expenses claim under the policy
Defendant claims there was no evidence, which could logically and legally support the claim for the additional living expenses incurred because of loss of use of the Boyd residence under construction. This court cannot agree. The court declined to grant a motion for directed verdict at trial, based on the evidence that was presented and the law that applies to such matters. The matter was appropriately one for the jury to determine.
A review of this claim must begin with the contract language about loss of use in the policy itself. The policy, introduced into evidence at trial, provides as follows:
COVERAGE E ADDITIONAL LIVING EXPENSE
We cover the necessary increase in living expense incurred by you so that your household can maintain its normal standard of living if a loss to property described in Coverage A, B or C by a Peril Insured Against under this Policy makes the described location unfit for its normal use. Payment shall be for the shortest time required to repair or replace the Described Location or, if you permanently relocate, the shortest time required by your household to settle elsewhere. This period of time is not limited by the expiration of this policy . . ."
As defendant correctly notes, to recover for additional living expenses under such a policy, the insured is required to affirmatively demonstrate that she incurred an actual increase in such expenses. See for example Georgia Farm Bureau Mutual Insurance Company v. Smith, 346 S.E.2nd 848, 851 (Ga.App. 1986) and Young v. State Farm Fire and Casualty Insurance Company, 426 So.2nd 636 (La. 1982). In United Services Auto Assn. v. Gordon, 103 S.W. 3d. 346, 443 (Tex.App. 2002), the court held that the word "incur" generally means "become liable or subject to" or "become liable to pay." Defendant maintains, based on the law, that the plaintiff presented no evidence that she actually incurred any additional living expenses. The court does not agree.
In Young, the evidence was that the plaintiff spent about 5 days a month in the home because of his travels. He owned a smaller home in which he continued to reside after the loss. The court concluded he had not presented any evidence of additional expenses.
In Gordon, the parties only presented evidence of estimates of what a replacement residence would cost and no actual expenses had been incurred.
The evidence plaintiff presented in support of this claim at trial was that Mrs. Boyd, through her husband and their insurance agent, Mr. Fay, had been in constant contact with the adjuster for the Hartford concerning payment of some amount for the expenses of maintaining two homes. Mr. and Mrs. Boyd at that time owned the vandalized and uncompleted home at 25 Westwood Drive in Waterford and another residence located on Colonial Drive, also in Waterford, in which they resided. It had been their plan to sell or rent their Colonial Drive home as soon as they were able to move into their second home, which the vandalism prevented. Mr. Rose, the defendant's adjuster, had encouraged them to submit a claim, suggesting that the mortgage expenses on the homes might qualify for reimbursement under this portion of the policy.
To determine when the Boyds "incurred" additional expenses, it becomes necessary to review the evidence as to when the Boyds could have occupied their new home and when they would have been able to dispose of their existing home. To determine if the damages award is appropriate, the court also must review the evidence as to what the shortest period of time required to repair or replace the Westwood Drive property would have been.
To support her claim, the plaintiff introduced evidence that the cost of the home on Colonial Drive was $2300 a month since it was encumbered by a first, second and third mortgage. There was also evidence that the cost of the Westwood Drive property's construction mortgage was $5,000 a month. There was evidence from which the jury could reasonably have concluded that the Boyds, but for the vandalism, would have been able to relocate into their new home on or before September 1, 1991.
There was varying evidence from the Boyds, the Boyds' son and various contractors as to the actual date, but none thought that it would have taken longer than this date.
In addition, Mrs. Boyd testified that there were property owners on Colonial Drive who had expressed an interest in purchasing the Boyd home, should it be available. Those neighbors wanted an additional house on the street for other members of their family, so that they would live close by. She also testified that she had been prepared to rent the Colonial Drive property, if necessary. While she did not further elaborate on any potential sale or rental, her evidence, if believed by the jury, was sufficient to remove these matters from the realm of speculation.
The jury could have concluded, but for the vandalism, the Boyds began to "incur" additional living expenses on their Colonial Drive home on September 1, 1991, even though they already resided in this residence. And further, the jury could reasonably have concluded that their normal standard of living was not yet the style reflected by the Westwood Drive property, but the standard set by the Colonial Drive property. Thus, the additional expense the plaintiff incurred beginning around September 1, 1991, at which time she could have been expected to sell or rent the home, was the $2,300 a month for the Colonial Drive property, and not the $5,000 or so for the Westwood Drive property.
Mr. Boyd also testified that his in-laws and son and daughter-in-law would be living with them in the Westwood Drive property, relatives who did not all reside with them on Colonial Drive.
The court also notes that extensive special interrogatories were given to the jury to guide it through the many counts of the complaint. Defendant never requested interrogatories concerning the details of the additional living expenses claim.
Next is the question of what the evidence demonstrated as the "shortest time required to repair . . . the described location . . ." provision under the policy. There was also varying testimony on this point from Mr. Boyd's contractor's statement of four months from the date of his inspection in August of 1991 to the very credible statement of Mr. Richardson, the mason, that at the time he inspected the property in November of 1991, it would have taken at least a year to reconstruct it, including the stone work, as it then existed. Thus, the jury not only could have reasonably concluded that the necessary increase in living expenses incurred was $2,300 a month, but also that the shortest period of time to repair the property was a period of 10 or so months. It also could reasonably have concluded that this length of time was partially due to the Hartford's failure to pay any substantial sums for the Westwood Drive property repair until December of 1991. Such evidence, if believed by the jury, supports the damages awarded of $23, 600.
Testimony of Mr. Sam Guppy.
See the detailed factual discussion in section below.
2). Breach of the Obligation of Good Faith and Fair Dealing
Defendant articulates this claim as one which requires proof that the Hartford injured the plaintiff's right to receive certain benefits under the policy and then limits those rights to the additional living expenses claim cited above. The defendant thereby ignores the main thrust of the plaintiff's proof on all counts in her case. Plaintiff's central complaint was that the Hartford unreasonably and unjustifiably delayed in paying her claim for damages. There was evidence from which the jury could have found bad faith, not restricted to the matter of additional living expenses incurred by the Boyds. The bad faith claim may be simply articulated as the long delay in any payments to the Boyds and the behavior of its agents in the handling of the claim, reflected in particular in the plaintiff's dealings with the Hartford's independent adjuster, Mr. Dallas Dodge.
The Hartford's obligations of good faith and fair dealing, in addition to paying out the benefits reasonably found to be due under the policy, also required it to engage in a reasonable process of adjusting the claims. As articulated in Feinberg v. Berglewicz, 32 Conn.App. 857, 861, 632 A.2d 709 (1993): "Every contract carries an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement . . . Bad faith means more than mere negligence; it involves a dishonest purpose . . . Neglect or refusal to fulfill a contractual obligation can be bad faith only if prompted by an interested or sinister motive."
As noted in Suitt Const. Co. v. Bottling Group, Superior Court, judicial district of Waterbury at Waterbury, complex litigation docket, No. X06-CV-02-0176332 S (Mar. 18, 2004, Alander, J.) "The obligation of good faith and fair dealing extends to the assertion, settlement and litigation of contract claims and defenses. The obligation is violated by dishonest conduct such as conjuring up a pretended dispute, asserting an interpretation contrary to one's own understanding, or falsification of facts. 2 Restatement (Second), Contracts, Duty of Good Faith and Fair Dealing, § 205, p. 909, comment e . . . A party to a contract violates the covenant of good faith and fair dealing by taking advantage of the necessitous circumstances of the other party to extort a modification of a contract without legitimate commercial reason. Id. See also Warner v. Konover, 210 Conn. 150, 155-56 (1989)."
In this case, the gravamen of the count against the Hartford for breach of its obligation of good faith and fair dealing was its failure to engage in fair settlement practices and its failure to pay sums in a timely fashion to the Boyds. The motives in question are to be inferred from the statements Mr. Dodge is alleged to have made, that is to save the Hartford money and to not pay out more than it is forced to pay.
The evidence showed that the Hartford's initial determination of the loss was a total of $16,000. The jury could reasonably have determined that the Boyds, through their agent, Mr. Fay, made it abundantly clear that they were in dire need of funds. While Mr. Boyd disputed the initial damage amount estimated, the jury could have determined that there was no satisfactory explanation as to why the Hartford had not paid even this amount to the Boyds as a partial payment in August or September of 1991.
Second, both Mr. Boyd and Mr. Fay testified to certain statements made by Mr. Dodge that an insurance company will never pay more than an insured was willing to accept. Mr. Dodge's demeanor and testimony lent credence to such statements and the jury could well have accepted as true statements the Hartford labels as "self-serving." In addition, there was uncontradicted evidence that when the Hartford was prepared to pay the sum of $109,000 to the Boyds in December of 1991, the check was marked as settlement in full. When Mr. Boyd noticed this, he refused the check until the restriction of full settlement was removed. If believed by the jury, such acts and comments by Dallas Dodge could reasonable support a finding that the Hartford was taking advantage of the "necessitous circumstances" of the Boyds to secure a modification of their rights under the policy.
Then there were the rancorous disputes over the air quality in the home and the long period of time that elapsed before any testing was performed by the Hartford as well as the disputes over the quality of the testing. If the testimony supporting the Boyd's claims was believed by the jury, it would provide reasonable support for the conclusion that the Hartford, through the acts of its agent, Dallas Dodge, failed to engage fairly in the process of the adjustment of this claim in a timely fashion. And last there remained the claims concerning the manner in which the repair and or reconstruction of the masonry was to be performed. There were vastly different opinions expressed by the witnesses as to how that work was to be performed. If the jury believed those contradicting the Hartford's witnesses, such testimony also would reasonably support the jury's conclusion of bad faith in the adjustment of this claim. While no one piece of this evidence would suffice to support a conclusion that the Hartford breached its obligation of good faith and fair dealing, all of them taken together reasonably support its conclusions.
The above outlined testimony is proof of the allegations of paragraphs 10, 11 and portions of paragraph 12 of Count Three of the plaintiff's complaint. Such evidence must be taken together with the inferences to be drawn concerning bad motive articulated above. The court concludes, contrary to the Hartford's claims, that the jury could reasonably have concluded that the Hartford breached its important implied contractual obligation of good faith and fair dealing.
Last is the issue of damages stemming from the breach of the obligation of good faith and fair dealing, for which the jury awarded the sum of $50,000. The plaintiff under this and the fraud claims was seeking the value of the loss of the Westwood Drive property to foreclosure. It is abundantly clear that this was an amount far greater than $50,000. Nonetheless, the jury could reasonably have concluded that the Boyds suffered some damages from the delay in receiving any insurance payment from late July or early August to December 1991. Those could reasonably have been based on the cost to meet the Westwood Drive property construction mortgage payments and late fees for a reasonable period of time. The jury instructions concerning damages directed the jury to determine any consequential damages, which were caused by the breach. While such instructions further detailed the claims made by the plaintiff as the loss of the home to foreclosure, such instructions do not require only one of two findings; the full amount of the loss of the house to foreclosure or no amount. They do not preclude the conclusion that some lesser amount of damages was proved. The jury so concluded, based on the evidence before it.
There were no special interrogatories on the subsidiary aspects of the breach of the obligation of good faith and fair dealing claim.
The charge stated: "If you have found that Mrs. Boyd had proven all of the elements of her cause of action of bad faith by a preponderance of the evidence, she would be entitled to the damages, which follow from or are caused by The Hartford's bad faith. Because the other appraisal action has already determined conclusively the actual damages to the property, you are only considering what are called consequential damages. Consequential damages are damages that are reasonably foreseeable to the defendant as the natural and probable results of its conduct . . ."
3). Suit against a non-existent legal entity, the Hartford Insurance Company.
The defendant's formulation of this legal issue is unusual. It begins with the proposition that the insurance contract between the plaintiff and the Hartford provides that any claim against the insurance company arising out of the contract must be commenced within one year of the date of the loss. In this instance the loss occurred on June 19, 1990 and all agree that suit was commenced just shortly before the year term had expired. Nonetheless, the defendant states the plaintiff sued the wrong entity, the Hartford Insurance Company, when the proper legal entity was the Hartford Fire Insurance Company. Since the plaintiff cannot amend her complaint to name the correct legal entity because of the contractual suit limitation period, the claim against the Hartford is barred, it argues. The court does not now agree and did not previously agree.
The defendant raised this claim for the first time in its motion for summary judgment in 2004. Its central claim, the lack of subject matter jurisdiction over an entity that has no legal existence, is typically raised early in the legal proceedings, by way of a motion to dismiss as soon as the incorrect party is named. This litigation, however, has been pending since 1991 and the claim was first raised in 2004. In addition, the Hartford Insurance Company, using the "incorrect name," had filed an appearance and participated in the lawsuit, seeking and responding to discovery and filing motions during that period of time. For various reasons articulated on the record, the court denied the motion. It concluded that, among other things, the Hartford sought summary relief in the form of a judgment from the court in favor of a legally non-existent defendant. At trial, the court also concluded that there were no contested facts for the jury to determine and refused to give a charge on the defendant's special defense. It is this last fact defendant now challenges.
It is hornbook law that a special defense permits a defendant to prove facts which are consistent with the plaintiff's statements but that "show, notwithstanding, that the plaintiff has no cause of action." Practice Book Section 10-50 — Denials; Special Defenses. Typically statutes of limitations or contractual suit limitation clauses are pled in such a fashion, but they are not meant as motions to dismiss in disguise, for they provide no notice to other parties of the underlying claim. The court notes that while the plaintiff, if alert, had some notice of the exact legal name of the defendant, the defendant's own communications with the plaintiff also contributed to the confusion. But even if the court generously interpreted either the motion for summary judgment or the special defense as a claim of lack of jurisdiction, the defendant is not entitled to the relief it seeks. This is so for two substantive reasons.
The separate litigation to compel arbitration in which the defendant was the plaintiff, for example, stated the correct legal name.
The first reason is that Connecticut General Statutes § 52-123 provides that a proceeding shall not be set aside for circumstantial errors, mistakes or defects "if the person and the cause may be rightly understood." In this case, it is abundantly clear that each side knew the identity of the other, and that the defendant, by the incorrect name, participated in the litigation for a very long period of time. Such participation included filing, pleadings and seeking affirmative relief using the incorrect legal name of the corporate entity.
In the case of Lussier v. Dept. of Transportation, 228 Conn. 343, 348-49, 636 A.2d 808 (1994), the court interpreted the terms "circumstantial errors, mistakes or defects" as used in General Statutes § 52-123 to mean that when a correct party is designated in a way that may be inaccurate but which is still sufficient for identification purposes, the mis-designation is a misnomer. A misnomer as described in Lussier does not prevent the exercise of subject matter jurisdiction if the defendant was served and knew it was the intended defendant. There are also a number of mechanic's lien cases, which hold the same. The court concludes from the facts that the defendant was served and knew it was the intended defendant.
Also instructive are cases concerning misnomers in mechanic's lien cases. Sec Big Y Trust v. Wesco Distribution, Inc., Superior Court, judicial district of Windham at Putnam, Docket No. 52042 (December 18, 1995, Sferrazza, J.) ( 15 Conn. L. Rptr. 501, 502) (upholding a mechanic's lien absent clear and convincing evidence that the misnomer was made in bad faith or caused the defendant to suffer prejudice); J.C. Penney Properties, Inc v. Peter M. Santella Co., Inc., 210 Conn. 511, 514, 555 A.2d 990 (1989) (stating that this state's public policy favors liberally construing claimed inadequacies in certificates of mechanic's liens in order to achieve the remedial purpose of the mechanic's lien statutes).
The second reason is that our case law, without reference to the statute, supports jurisdiction where there is a mis-description of a defendant. The effect given to such a mis-description usually depends upon the question whether it is interpreted as merely a misnomer or defect in description, or whether it is deemed a substitution or entire change of party; in the former case an amendment will be allowed, in the latter it will not be allowed. Kaye v. Manchester, 20 Conn.App 439, 445, 568 A.2d 459 (1990). See also World Fire Marine Ins. Co. v. Alliance Sandblasting Co., 105 Conn. 640, 643-44, 136 A. 681 (1927).
In Pack v. Burns, 212 Conn. 381, 384, 562 A.2d 24 (1989) the defendant sued the "State of Connecticut Transportation Commission." There is no such entity. The Supreme Court held that the plaintiff intended to sue the commissioner of transportation and that the commissioner knew that he was the intended defendant. The commissioner was not misled to his prejudice. The office of the commissioner was served with the initial lawsuit. It was conceded by all parties and the courts that the "Connecticut Transportation Commission" was a non-existent entity. The Supreme Court adopted three factors concerning the mis-description of a defendant as a party: (1) The proper party defendant has actual notice of the institution of the action; (2) The proper party knew that it was the proper defendant in the action; and (3) The proper party was not in any way misled to its prejudice.
Applying these 3 tests to this case, the court concluded that the proper party had notice of the institution of the action, as evidenced by its years of participation in this lawsuit. It certainly knew it was the proper defendant in the action and it was not mislead in any way to its prejudice. Any motion to dismiss, in whatever guise, could not be granted on these grounds.
II CONCLUSION
For all the foregoing reasons, the court denies the motions to set aside the jury verdict, for judgment notwithstanding the verdict, and for a new trial.
BY THE COURT
BARBARA M. QUINN, Judge