Opinion
No. CV-02-0467870 S
October 14, 2005
MEMORANDUM OF DECISION ON CAPLAN CO. MOTION FOR SUMMARY JUDGMENT
In this matter the third-party defendant Caplan Co., LLC Insurance (Caplan) has moved for summary judgment against the third-party complaint. Both parties have submitted affidavits which in many respects contain non-admissible hearsay and do not sometimes reveal the basis for the matters asserted. Cf., Associates Financial Services of America, Inc. v. Sorenson, 46 Conn.App. 721, 731-33 (1977); McColl v. Pataky, 160 Conn. 457 (1971); Verderame v. Anderson Sunnyside Farm Assoc., 2003 WL 6186, (Arnold, J.); same case 2004 Ct.Sup. 47, 48 (Skolnick, J.). However, there are certain facts that by way of admissions appear to be undisputed.
The third-party plaintiff, Owl's Nest Cafe, bought a cafe from Val Cunha, LLC. Val Cunha had a commercial liability insurance policy through Caplan. Caplan was called by Val Cunha in the fall of 2001 who said he planned to sell his business to Jose Cunha. The purpose of the call was to have Caplan add the Owl's Nest Cafe, LLC (of which Jose Cunha is a member) to the policy. The one-year policy was effective to July 2002.
An individual named Cabarrus claims to have been injured on the Owl's Nest property in March 2002. When Jose Cunha reported the claim to Caplan he was informed that there was no coverage.
The claim made in the third-party complaint is that Caplan failed to make the necessary changes in the policy after being notified to do so because of the transfer of ownership.
An affidavit submitted by Jose Cunha stated that Bob Caplan, an agent of Caplan Insurance, who is now deceased, told him directly "that the changes (to the policy) would be made and everything was all set." In paragraph 15 of the same affidavit Jose Cunha states that when he reported the accident to Bob Caplan he was "advised that the requested changes were never made because Bob Caplan thought that (he) was related to Val Cunha and there was no need to change the name(d) insured when the business was transferred from one family member to another."
Cheryl Follert submitted an affidavit in behalf of Caplan to support this motion; she is a commercial account representative for the agency. The admissible, non-hearsay portions of the affidavit which the court can consider are somewhat limited due to the fact that some of the statements Follert makes are based on hearsay communications from the deceased Bob Caplan. Of her own knowledge, however, she verifies that the underlying Val Cunha policy was in effect from July 2001 to July 2002. The policy was not changed to add Owl's Nest in the fall of 2001. She said Caplan told her to contact their insurance broker to determine whether the policy could be amended to include Val Cunha's brother-in-law and Owl's Nest Cafe. Follert goes on to say that in January 2002 she contacted the brokerage to determine whether the requested change could be made. She was told the change could not be made and the policy had to be rewritten. She said to write a new policy information from Jose Cunha was needed along with his signature. This, at least in the court's opinion, is all it can extract from the Follert affidavit that is not inadmissible evidence.
Caplan's motion for summary judgment is directed against the first count which alleges a violation of the Connecticut Unfair Trade Practices Act (§ 42-110b) (CUTPA). Count two which alleges a breach of contract; count three which claims a violation of the covenant of good faith and fair dealing and count four unjust enrichment.
The standards to be applied in addressing a motion for summary judgment are well-known. A party has a constitutional right to a trial so such a motion should not be granted if there is a material fact in dispute. Such a motion should be granted, however, if there is no genuine issue of material fact that would bar the moving party from prevailing on its motion.
(1) (a)
The first count alleges a violation of CUTPA. To analyze the viability of this count it is necessary to understand that the CUTPA claim is made with reference to the breach of contract claim made in the second count. The latter count in fact incorporates all the factual allegations of the first count.
Interestingly the defendant says on the one hand that there can be no CUTPA violation because "there are no allegations or proof that Caplan's conduct was anything beyond an alleged simple breach of contract." But in moving for judgment on the second breach of contact count the defendant argues no such claim can be made because the alleged contract was "never consummated with Owl's Nest nor was a new agreement established with Val Cunha."
In response to the attack on the breach of contact count which has to be incorporated in its response to the attack on the CUTPA count since the factual allegations of both counts are the same, all the plaintiff argues is that the existence or non-existence of a contract is a question of fact for the jury. But the plaintiff never really explains its contract theory.
It does not appear for example that Jose Cunha and Owl's Nest are making a claim that they are third-party beneficiaries of an underlying contract. It appears from examining its brief that the defendant simply claims that in fact a contract was entered into between the plaintiff and Caplan. The Defendant argues that Bob Caplan represented to him "everything was all set and the changes would be made" (ensuring coverage). But where is the consideration — the premium had already been paid by Val Cunha. What appears to be alleged is breach of an implied contract based on some notion of detrimental reliance. This concept, as far as the court could find, is not extensively discussed in our cases but is well recognized in other jurisdictions. 17 Am.JR.2d "Contracts" § 12, pp. 48 et seq.; Contracts Calamarie Perillo, 3 ed., § 1-12, pp. 19-20, cf Restatement (2) Contracts, § 90. The detrimental reliance, in effect, substitutes for consideration.
In any event despite at least some of the foregoing observations both parties appear to invite the court to analyze the motion against the CUTPA count as if there was an underlying contract of contractual relations between the parties — the defendant explicitly, the plaintiff by incorporating the very same factual allegations in the CUTPA count to support the breach of contract claim. Also the court regards the contract claim as lying in quasi-contract or implied contract theory.
Because of this the court will rely on the language and reasoning of its opinion in Design on Stone, Inc. v. John Brennan Construction, 21 Conn. L. Rptr. 659. That case involved an express contract but the court believes its reasoning would apply to this situation. Most trial courts support the position that a simple breach of contract will not support a CUTPA claim; see Designs on Stone, supra, Emlee v. Equipment Leasing Corp., 41 Conn.Sup. 575 (1991); also see Boulevard Assoc. v. Sovereign Hotels, 72 F.3d 1029, 1039 (CA 2, 1995 and cf., Bartolomeo v. S.B. Thomas, Inc., 889 F.2d 530, 535 (CA 4) where the court came to the same conclusion in interpreting a North Carolina unfair trade practices act similar to our own.
In Sovereign Hotel the court said:
A rule to the contrary — that a company violates CUTPA whenever it breaks an unprofitable deal — would convert every contract dispute into a CUTPA violation. We cannot assume that the Connecticut legislature, in enacting CUTPA, intended such an extraordinary alteration of the common law.
The foregoing observation would also of course apply to a situation where contractual obligations or representations are not met because of the incompetence or negligence of a defendant.
The point is that the burdens and risks of contract formation would be intolerably increased if simple breach claims when successful could turn into windfalls.
(b)
But it is also true that "the same facts that establish a breach of contract claim may be sufficient to establish a CUTPA violation." Lester v. Resort Campgrounds International, Inc., 27 Conn.App. 59, 71 (1992). And the author of Emlee later held that an allegation of a breach of contract can make a legally sufficient CUTPA claim as long as there are "substantial aggravating circumstances." CNF Constructors, Inc. v. Culligan Water Conditioning Co., 8 C.S.C.R. 1057 (1993). In CNF Constructors the substantially aggravating circumstances involved "misrepresentations that induced the contract" and the breach itself involved an allegation that "Used materials were supplied under the guise of new ones" (emphasis added). The Lester case concerned a situation where the defendant lied to entice the plaintiffs to enter the contract. 27 Conn.App. Pp. 59, 71-72. Also see Production Equipment Co. v. Blakeslee Arpaia Chapman, Inc., 1996 WL 24607S, 15 Conn. L. Rptr. 558.
In this case the question presented is whether there are any aggravating circumstances which make this claim more than a simple breach of contract claim or analogous to such a breach and thus either (1) unfair or (2) deceptive under § 424106.
(c)
The cigarette rule is the standard our courts use to test whether conduct is unfair. Tanpiengo v. Tasto, 72 Conn.App. 817, 819 (2002); Ventres v. Goodspeed Airport, 278 Conn. 105, 155 (2005).
That rule asks:
"(1) [w]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers [competitors or other businessmen]."
Larsen Chelsey Realty Co. v. Larsen, 232 Conn. 480, 507 (1995).
All the affidavit of Cunha alleges in behalf of Owl's Nest is that Bob Conway told him was that he would change the information on the insurance policy of the previous owner so that Owl's Nest would be covered under that policy and that "everything was all set." After the incident which led to the claim against Owl's Nest the affidavit says Caplan told Mr. Cunha that the changes were in fact not made because Caplan thought Val Cunha, a member of the previous owner LLC, was a relative of Jose Cunha, a member of Owl's Nest. In such a case coverage would simply continue without changes to the policy. This was incorrect and coverage was denied as Ms. Fuller notes in her affidavit also.
Even if the court accepted as established the mere statement in the plaintiff's brief that Jose Cunha told Caplan he was not related to Val Cunha and the statements that Caplan neglected to contact Jose Cunha about the problem, this establishes nothing more than negligence or incompetence not unethical, immoral, or unscrupulous behavior. No nefarious motive has been or presumably could be suggested as to why Bob Caplan acted or failed to act the way he did. The fact that Fuller says Caplan instructed her to contact the insurance broker to see if the policy could be amended to include Val Cunha's "brother in law" and Owl's Nest Cafe indicates Caplan's state of mind or belief, as to the relationship between the two men. Why would Caplan go through the exercise of calling the broker if he really knew the Cunhas were not related? What advantage or profit could accrue to Caplan by not effectuating coverage — the premium had already been paid. The court cannot find any aggravating circumstances beyond the actual breach or failure to deliver on an earlier representation.
Accepting all the facts as alleged by the plaintiff as true the court cannot find a CUTPA violation as a matter of law.
Such an issue can be decided as a question of law see, supra Designs on Stone and Bartolomeo v. S.B. Thomas, supra (motion for summary judgment).
The court will not address any problems presented by this claim under Mead v. Bums, 199 Conn. 651 (1986) as this matter was not fully briefed by the parties.
(d)
The second question under § 42-110b is whether the actions of Caplan deceptive. Basically in the complaint Owl's Nest claims Jose Cunha told the necessary policy changes would be made and everything was all set. They were not made in fact — is this a "misrepresentation" that would qualify as a deceptive act under CUTPA?
It has been held that a "misrepresentation" can constitute an aggravating circumstance that would allow a simple breach of contract claim to be treated as a CUTPA violation because it would be, in effect, a deceptive act. Cf CNF Constructors, Inc. v. Culligan Water Conditioning Co., supra, dicta in Production Equipment Co. v. Blakeslee Arpaia Chapman Inc., et al., supra.
In enforcing CUTPA our courts look to the actions of the Federal Trade Commission for guidance. Under federal precedents and CUTPA decisions, a CUTPA plaintiff is not bound by the limitations on the common-law action for misrepresentation when making that the basis of its claim. Such a plaintiff for example need not prove reliance on the misrepresentation or that the representation became part of the basis for the bargain. Web Press Services Corp. v. New London Motor, Inc., 203 Conn. 342, 363 (1987) and knowledge of falsity either constructive or actual need not be shown. Prishwalko v. Bob Thomas Ford, Inc., 33 Conn.App. 575, 583 (1994). Cf. Bailey v. Employment System, Inc. v. Hahn, 545 F.Sup. 62, 67 (D.Conn. 1982) aff'd 723 F.2d 895 (CA 2, 1983). It would also follow that it is not necessary that a seller have an intent to deceive under the FTIC and CUTPA. Cheshire Mortgage Services, Inc. v. Montes, 223 Conn. 80, 106 (1992); see generally, Bailey v. Employment System, Inc. v. Hahn, supra.
However, the court has found no case that holds that a statement predictive of future conduct somehow becomes a "misrepresentation" for CUTPA purposes simply when the party making the representation cannot effectuate the promised result. This is not to say that to be a misrepresentation the representation must be related to an existing or past fact. Even at a common law, there were exceptions to such a requirement such as where the representation as to a future fact was coupled with a present intent not to fulfill the premise. Piava v. Vaneck Heights Construction Co., supra, or where there has been non-disclosure of facts by a party having a duty to disclose. Egan v. Hudson Nut Products, 142 Conn. 344, 347 (1955). But where these latter factors do not exist, CUTPA liability should not be imposed where the defendant merely has not delivered on a promise (necessarily relating to future performance when made) made at the time the contract (or here the promise to effectuate coverage) was entered into. Otherwise every simple breach of contract claim would constitute a CUTPA violation since in every breach of contract claim the party who is accused of the breach has not performed on a prior representation (i.e., contract commitment). Connecticut case law implicitly though not explicitly seems to share this view, thus in CNF Constructors, the representation found to be a misrepresentation "induced the contract," i.e., it must have been a misrepresentation at the time of contract formation; also see Lester misrepresentation made at time of contract formation to induce party to enter into contract.
There is no such allegation here. There is no allegation that the defendant knew or even should have known it could not deliver on its promise to secure coverage for Owl's Nest when it made its representations to that effect or that at that time it failed to disclose facts relative to its ability to do so which in fairness it ought to have disclosed. The failure to contract the Cunhas even if the court accepts it as established is not a "misrepresentation" in any understandable sense of the word.
For the foregoing reasons the CUTPA court is dismissed.
(2)
The court will not dismiss the breach of contract count because of its previously stated view that giving the complaint every favorable inference, an implied or quasi contract claim could possibly be asserted. This count would have benefited by a request to revise.
(3)
The summary judgment motion is also directed towards the third count in which there is claimed to be a violation of the covenant of good faith and fair dealing. It is clearly the rule in our state that the covenant applies to insurance contracts as well as all other contracts. Buckman v. People Express, Inc., 205 Conn. 166, 170 (1987). Assuming without deciding the covenant applies to implied or quasi-contract situations the case of De La Concha of Hartford v. Aetna Life Ins. Co., 269 Conn. 424, 432-33 (2004) defines this theory of recovery by quoting from earlier cases:
"To constitute a breach of that covenant, 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." Alexandru v. Strong, 81 Conn.App. 68, 80-81, 837 A.2d 875, cert. denied, 268 Conn. 906, 845 A.2d 406 (2004), citing Gupta v. New Britain General Hospital, 239 Conn. 574, 598, 687 A.2d 111 (1996). `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.' (Citation omitted; internal quotation marks omitted.) Habetz v. Condon, 224 Conn. 231, 237, 618 A.2d 501 (1992)."
This definition conforms to that in Restatement (2) Contracts, § 205, cited in Buckman. Specifically related to the issue now before the court "[n]eglect or refusal to fulfill a contractual obligation can be bad faith only if prompted by an interested or sinister motive." Feinberg v. Berglewicz, 32 Conn.App. 857, 862 (1993).
In its pleadings and in the affidavits the plaintiff submits, the plaintiff has failed to supply an evidentiary foundation for bad faith claim. In such circumstances the court cannot say a question of fact is presented if the summary judgment process is to have any function. Granting such a motion under these circumstances is appropriate and has been upheld by our court where, for example, a good faith and fair dealing claim has been dismissed by the trial court by means of summary judgment procedure. Gutpa v. New Britain General Hospital, 239 Conn. 574, 590 et seq. (1996). The court relies on its factual discussion in the decision as it relates to the CUTPA count and the uncontroverted assertion by Ms. Follert that she did in fact try to secure the coverage requested by Jose Cunha. Nothing in the facts presented by this motion shows anything more than negligence if the plaintiff's allegations are to be given every favorable inference.
The court will grant summary judgment as to this count.
(4)
In count four the plaintiff makes a claim for unjust enrichment against Caplan by retaining policy premiums apparently paid in full by Val Cunha, LLC for the effective policy period of July 28, 2001 to July 28, 2002.
To establish a claim of unjust enrichment it must be shown that (1) the defendant was benefited, (2) that the defendant unjustly did not pay the plaintiff for the benefit, and (3) the failure to make payment was a detriment to the plaintiff. Gagne v. Vaccaro, 225 Conn. 309, 409 (2001); Hartford Whalers Hockey Club v. Uniroyal Goodrich Tire Co., 231 Conn. 276, 283 (1994).
Here any premium payments came from Val Cunha, LLC not Owl's Nest Cafe. There is no evidence to indicate the premium payments had been made to benefit Owl's Nest or that Val Cunha had any obligation to do so at the time payments were made.
Even if the plaintiff were to prevail on some type of contract theory there is no claim that Owl's Nest would have any unjust enrichment claim for premiums it did not itself pay at least given the bare boned allegations made here.
* * * *
The first, third, and fourth counts against Caplan are dismissed. The court will not grant summary judgment as to the second count.
Corradino, J.