Opinion
No. CV08-5006633S
April 8, 2010
MEMORANDUM OF DECISION
FACTS
The Defendant, The Hartford Insurance Company/Hartford Fire Insurance Company (The Hartford), issued to the City of Derby a Policy of Insurance (Policy #31 UUNMD 1972) with effective dates of April 1, 1991 to April 1, 1992. The Special Multi-Flex policy contained a limit of one million dollars ($1 million) per occurrence.
On August 12, 1991, at approximately 6:53 p.m., a fire ignited in the basement of property owned by DA Associates, at 273 Caroline Street, Derby. Among the tenants in the apartment building were George Jordan, Sr., his wife Adrienne Jordan, and their five children.
The property had been approved as Housing and Urban Development (HUD) Section 8 housing, under a program administered by the City of Derby.
As a result of the fire, Adrienne Jordan and two of her children, Alicia Jordan and Justin Jordan, died.
In January of 1993, a wrongful death action was initiated by Phyllis Skirvin, Administratrix of the estates of Adrienne Jordan, Alicia Jordan, and Justin Jordan. In that same suit, claims were made on behalf of the three surviving children, George Jordan, Jr., James Jordan and Jeremy Jordan, by Phyllis Skirvin, as guardian for the minor children.
According to the complaint, George Jordan, Sr., acting under authorization provided by the landlord, was making repairs to a rotted out area of the kitchen floor. While making the repairs, he spilled a quantity of combustible liquid fuel on the basement floor.
The fuel ran under the water heater, and ignited a fire which spread rapidly throughout the building.
Adrienne Jordan and three of her children, Jeremy, George, Jr., and James, escaped from the structure. The mother returned to the burning building, in search of Alicia and Justin. However, although she was successful in locating the children, the three were unable to get out of the building safely, and died.
In addition to the City of Derby, the city's fire marshal, the landlord, Richard Kastens, Arnold Botti and DA Associates, along with the Derby Housing Authority, were named as defendants. George Jordan, Sr. was made a party to the case as an Apportionment Defendant, but no direct claim was made against him.
Claims of negligence and recklessness were pled against the City of Derby and its fire marshal. It was alleged that the fire marshal failed to properly inspect the premises, and that the failure to inspect violated a mandatory, and non-discretionary duty.
On January 18, 1995, simultaneous offers of judgment, pursuant to § 52-192a of the General Statutes, were filed as to all six plaintiffs. Offers of judgment in the amount of $250,000 were filed on behalf of the three surviving children, George, Jr., Jeremy and James. Offers of judgment in the amount of $750,000 were filed on behalf of the Estate of Alicia Jordan, the Estate of Justin Jordan, and the Estate of Adrienne Jordan.
The six offers of judgment totaled three million ($3 million) dollars.
As a July 17, 2006 trial date approached, settlement negotiations and mediation efforts to resolve the case intensified.
On July 5, 2006, Attorney David Rosen, who represented all of the Plaintiffs, sent a letter to the corporation counsel of the City of Derby.
In his letter, Attorney Rosen disparaged the litigation strategy employed on behalf of the City of Derby, claiming that, in the event of a verdict, the city would be exposed to ". . . offer of judgment interest that far exceeds the amount of the verdict . . ."
Although Attorney Rosen states in his letter: ". . . every one of the offers (of judgment) was substantially less than the policy limits . . ., " he fails to point out that the aggregate sum was three times the one million ($1 million) dollar limit of the City of Derby's policy, or that the policy was what is commonly known as a single limit policy which provides a sum certain per occurrence.
The letter also refers to an "insulting" offer of judgment of $5,000 filed in September of 1994. That offer of judgment was filed by CIGNA Insurance, and was not tendered by the only defendant in this case, The Hartford.
The intense mediation efforts coupled with an inevitable trial provided the impetus for a courthouse steps settlement. The Plaintiffs agreed to accept $2.4 million dollars in full satisfaction of all of the claims.
The Hartford tendered the limits of its policy, one million ($1 million) dollars toward the settlement, while the City of Derby agreed to contribute an additional one million ($1 million) dollars. A $400,000 contribution was made on behalf of the Derby Housing Authority.
In its one-count complaint filed in this case, the City of Derby claims that The Hartford breached its contract of insurance, because it failed to pay offer of judgment interest above the stated limits of its policy.
Derby claims, in its complaint (Par. 11), that The Hartford breached its contract with the insured, in that it failed to:
a) Provide adequate settlement negotiations,
b) accept a demand within the policy limits;
c) adequately provide notice to the insured of its exposure over the policy limits;
d) consider and/or pay post offer of judgment interest and extend its policy limits accordingly;
e) timely and properly arbitrate to determine the issue of "coverage" under the policy;
f) tender the full amount available under the coverage.
The Hartford has moved for summary judgment, claiming that it is entitled to judgment, as a matter of law. In that regard, it maintains that no provision of its policy, in the absence of a judgment, extends the limits of coverage above one million ($1 million) dollars.
STANDARD OF REVIEW-SUMMARY JUDGMENT
The party seeking summary judgment has the burden of showing the absence of any genuine issue as to any material fact, and that it is entitled to judgment as a matter of law. Suarez v. Dickmont Plastics Corp., 229 Conn. 99, 105 (1994); D.H.R. Construction Co. v. Donnelly, 180 Conn. 430, 434 (1980). A material fact has been defined as one which will make a difference in the result of the case. United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 379 (1969).
A motion for summary judgment may be granted only when affidavits and other documentary evidence demonstrate that no genuine issue of fact exists or remains between the parties, and that the moving party is entitled to judgment as a matter of law. Bartha v. Waterbury House Wrecking Co., 190 Conn. 8, 11 (1983); Hammer v. Lumberman's Mutual Casualty Co., 214 Conn. 573, 578 (1990).
Although the purpose of a motion for summary judgment is to test for the presence of contested factual issues, the use of a motion for summary judgment to challenge the legal sufficiency of a complaint is appropriate where the complaint fails to set forth a cause of action, and the defect cannot be cured by re-pleading. Larobina v. McDonald, 274 Conn. 394, 401 (2005).
OFFER OF JUDGMENT (COMPROMISE) INTEREST DOES NOT APPLY IN THE EVENT OF A SETTLEMENT PRIOR TO TRIAL
The City of Derby claims it is entitled to recover prejudgment interest from The Hartford, predicated upon the filing of offers of judgment in the aggregate amount of three million ($3 million) dollars on January 18, 1995. On that date, the offer of judgment statute, § 52-192a of the General Statutes, read:
Section 52-192a, C.G.S. has since been amended, and is now titled "offers of compromises." Other changes, not relevant to the issues presented here, were also made. (See P.A. 01-71, P.A. 05-275 and P.A. 07-141.)
(a) After commencement of a civil action based upon contract or for the recovery of money only, the Plaintiff may, before trial, file with the court a written "offer of judgment" signed by him or his attorney, directed to the defendant or his attorney offering to settle the claim underlying the action, and to stipulate to a judgment for a sum certain . . . Within thirty days of being notified of the filing of an "offer of judgment," the defendant or his attorney may file with the court a written "acceptance of offer of judgment" agreeing to a Stipulation, for judgment as contained in the plaintiff's "offer of judgment" . . . If the "offer of judgment" is not accepted within thirty days, the "offer of judgment" shall be considered rejected and not subject to acceptance unless refiled . . .
CT Page 8421
(b) After trial the court shall examine the record to determine whether the plaintiff made an "offer of judgment" which the defendant failed to accept. If the court ascertains from the record that the plaintiff has recovered an amount equal to or greater than the sum certain stated in his "offer of judgment" the court shall add to the verdict twelve percent annual interest on the amount of the verdict . . . In those actions commenced on or after October 1, 1981, the interest shall be computed from the date the complaint in the civil action was filed, with the court, if the "offer of judgment" was filed not later than eighteen months from the filing of such complaint . . .
The Hartford maintains that because the case was settled as to all plaintiffs and defendants prior to trial, the offer of judgment (compromise) statute cannot avail the city of Derby.
This claim is persuasive.
Prejudgment interest is awarded by the trial court, when a valid offer of judgment is filed by the plaintiff, the offer is rejected by the defendant, and the plaintiff ultimately recovers an amount equal to or greater than the offer of judgment after trial. Cardonas v. Mixcus, 264 Conn. 314, 321 (2003). A strong public policy favors the pretrial resolution of disputes. Blakeslee Arpaia Chapman, Inc. v. EI Constructors, Inc., 239 Conn. 708, 742 (1997).
The offer of judgment statute is punitive in nature, and the underlying purpose of the statute is to provide an impetus to settle cases. Ceci Bros Inc. v. Five Twenty-One Corp., 81 Conn.App. 419, 430 (2004). It is designed to further the objective of pre-trial settlement disputes. Black v. Goodwin Loomis Britton, Inc., 239 Conn. 144, 165 (1996).
The court agrees with the sound and well-reasoned decision penned by Judge John Downey, in Costantino v. Skolnick, 2008 Conn.Super. LEXIS 128, No. CV-04-4000748 (Downey, J.). Judge Downey pointed out that the statute provides for an examination of the record by the trial court "after trial," and that the plain reading of § 52-192a provides for an award of interest only after trial, and judgment. This is true, regardless of the language of a particular insurance policy. Costantino v. Skolnick, supra, at 4-5.
Here, The Hartford never had an opportunity, pursuant to the offer of judgment statute, to settle all claims, within the one million ($1 million) dollar policy limit applicable at the time of the fire. To have acquiesced in a partial settlement of some of the claims, would have left the City of Derby without monies under the policy, in the event of a large verdict. It might also have formed a solid basis for a claim of legal malpractice, had the attorneys determined to settle only one of the wrongful death claims, for the payment of $750,000.
The Hartford did not "fail to accept a demand within the policy limits" (Par. 11(b)), or "fail to tender the full amount available under the coverage" (Par. 11(f)), in light of its payment of the limits of coverage, one million ($1 million) dollars.
Equally unavailing is the claim that The Hartford breached its contract when it "failed to consider, and/or pay post offer of judgment interest and extend its policy limits accordingly" (Par. 11(d)). No provision of the applicable policy of insurance provides for the payment of monies in excess of the one million ($1 million) dollar limits, in the absence of a judgment rendered against the insured, the City of Derby.
Therefore, the Plaintiff's claim that the provisions of the policy of insurance extend beyond one million ($1 million) dollars is not compelling.
THE CITY OF DERBY CANNOT SUSTAIN A BREACH OF CONTRACT CLAIM, BASED ON ALLEGATIONS OF NEGLIGENCE
The City of Derby also maintains, in its complaint, that The Hartford failed to "provide adequate settlement negotiations" (Par. 11(a)), failed to "adequately provide notice to the insured of its exposure over the policy limits" (Par. 11(c)), and "failed to timely and properly arbitrate, to determine the issues of coverage under the policy" (Par. 11(e)).
None of these claims can provide a basis for recovery by the City of Derby.
A plaintiff may allege claims of breach of contract and claims of negligence against an attorney, in the same action. However, a contract claim will not be permitted, if it involves a negligence claim, cloaked in contract language. Caffey v. Stillman, 79 Conn.App. 192, 197 (2003); Hill v. Williams, 74 Conn.App. 645, 659 (2003). Simply placing a contract tag on a tort claim does not change its character. Pelletier v. Galske, 105 Conn.App. 77, 82 (2007).
The City of Derby has not pressed any claim of professional negligence in its one-count complaint against either The Hartford, or the attorneys selected by The Hartford to represent Derby's interests in the legal action which followed the August 12, 1991 conflagration.
The Plaintiff City of Derby does, however, point to Attorney Rosen's letter of July 5, 2006, to support its breach of contract claim. The city's reliance upon that letter is misplaced, and does nothing to assist its claims.
It should be noted that the July 5, 2006 letter was written prior to the start of trial, and can reasonably be interpreted as an attempt to frighten the city into pressuring its insurance carrier to offer its full policy limits, prior to the start of trial later in July of 2006.
The worst case scenario painted by Attorney Rosen, coupled with an anecdotal "war story" designed to highlight Derby's potential exposure, evidently had the desired affect.
At no time does the record reveal that Attorney Rosen agreed to settle the claims of all six plaintiffs for one million ($1 million) dollars. His observation in the letter that "every one of the offers was for substantially less than the policy limits" is meaningless. Of the aggregate sum of three million ($3 million) dollars stated in the six offers of judgment, the three wrongful death cases accounted for two million, two hundred and fifty thousand ($2.25 million) dollars.
Furthermore, Attorney Rosen's dismissive comments concerning the quality of the defense provided by counsel selected by The Hartford are discredited, based upon an examination of the "Trial Report" provided by Attorney James E. Coyne on May 26, 2006. This report, which was appended to the Plaintiff's memorandum in opposition to the motion for summary judgment, is an exhaustive and detailed evaluation of the facts of the case, the applicable law, and the expert testimony which it was anticipated would be produced during the trial.
The trial report declares that Attorney Rosen demanded, during negotiations, that The Hartford pay, in the absence of a verdict, all interest which had accumulated pursuant to the six offers of judgment. This demand was appropriately rejected.
The City of Derby's attempt to resurrect the claim for pre-judgment interest in this case, is equally lacking in merit.
No facts have been presented, which would support Derby's breach of contract claim. However, assuming, arguendo, that a breach of contract claim had been properly pled and supported, the City of Derby has failed to demonstrate that it sustained any damages.
The full policy limits of one million ($1 million) dollars were tendered in furtherance of a settlement which included the City of Derby, and the Derby Housing Authority.
Furthermore, an examination of the documents provided demonstrates that no claims of professional negligence, against either The Hartford or the attorneys retained by the Defendant, can be substantiated.
CONCLUSION
The motion for summary judgment, is GRANTED.