Opinion
No. CV 01-0085772S
July 3, 2003
MEMORANDUM OF DECISION
This action stems from denial of coverage to the plaintiff by an insurer. The plaintiff, Noushin Ehsan, brought this action in five counts to recover under a homeowner's policy sold by the defendant Ericson Agency, as agent for the defendant, Cambridge Mutual Fire Insurance Company. After the plaintiff made a claim under that policy, Cambridge Mutual denied coverage. For the reasons stated below, the court finds that the plaintiff may recover under the policy, but to a more limited extent than she has claimed.
I — NATURE OF PROCEEDINGS
The plaintiff alleges that the insurance carrier, Cambridge Mutual, breached its insurance contract with her (first count), violated that contract's implied covenant of good faith and fair dealing (second count), and waived any contract exclusions (fourth count). She also raises two claims against the Ericson Agency, which sold her the homeowner's policy — for negligent misrepresentation (third count) and negligence (fifth count). The defendants deny material portions of the complaint and plead six special defenses: failure to provide prompt notice of loss (first special defense), failure to show the damaged property (second special defense) exclusions under the policy for vandalism or malicious mischief in a property vacant for more than thirty days (third special defense) or for damages resulting from wear and tear (fourth special defense), material concealment and misrepresentation of facts and fraudulent conduct in applying for the insurance and presenting her claim (fifth special defense), and contributory negligence (sixth special defense).
Trial commenced on January 7, 2003, and was continued to various dates thereafter until the close of evidence on February 16, 2003. After the parties filed post-trial briefs and reply briefs, the case was submitted to the court for decision on March 21, 2003. After due consideration of the issues presented through the totality of the evidence, including the testimony of multiple witnesses and the submission of numerous exhibits, and having reflected upon the parties' arguments, the court hereby makes the following findings of fact and conclusions of law.
II — LIABILITY
Additional findings of fact relevant to specific legal issues in the case are discussed in other portions of this memorandum.
The resolution of this case, and of the parties' conflicting claims, depends in large part on the credibility of the witnesses testifying at trial, particularly the credibility of the plaintiff. The court has observed the demeanor of the witnesses and evaluated their credibility. The court has carefully considered all of the evidence, including the exhibits and the testimony presented, according to the standards required by law.
The plaintiff testified for more than three days. The defendants also introduced into evidence the 142-page transcript of her two-day examination under oath (EUO) by defense counsel, and the parties submitted numerous documents she prepared or submitted to the insurance company in presenting her claim. The court thus had an extensive opportunity to observe the plaintiff and assess her credibility. After doing so, the court finds her to be credible and her testimony for the most part well-founded.
When Noushin Ehsan sought insurance for a New Preston dwelling she was purchasing in late 1999, she told Ericson Agency employee Peter Houldin that she lived in New York City and already owned another weekend home in Cornwall. Initially she told him that she was planning to rent out the New Preston home, but during their conversations she also told him that although she intended to use one of her Connecticut properties as a seasonal and weekend home and the other as an investment rental, she was at that point uncertain which property she would use for which purpose. She also told him that, while she decided, it was likely that she would also rent the property out for short periods when she was not using it. Houldin told her that, since she was unsure about the usage of the New Preston property, she could purchase homeowner's insurance for it and if she later decided to use it as the investment rental she should convert the insurance to a Dwelling and Fire Policy once she began renting the property for extended periods. He also told her that she could occasionally rent out the New Preston house for short periods but that if she decided the New Preston home would become investment rental, or if she began renting it for extended periods, she would need to convert the homeowner's policy to a Dwelling and Fire Policy after she began renting it out for such purposes.
The New Preston home that is the subject of this action was unfurnished when purchased by the plaintiff. In the six months after purchasing that home, she furnished the house, visited it most weekends, stayed there once for an entire week and on at least two other shorter occasions, held several parties there, rented it out twice for short periods, and once rented out the Cornwall home. Her actions in that period were consistent with an individual getting a new home ready either for seasonal occupancy by herself or for use as investment property. The court finds credible her statements to Houldin then and at trial that when she purchased the New Preston home she was not sure which of her Connecticut homes she was going to use as her own weekend home and which one she would rent out to others.
In late May of 2000 the plaintiff began negotiating with one Tyrus Williams to rent the New Preston home for a year. The plaintiff would not sign a lease or permit Williams to occupy the premises, however, until he had paid a security deposit and the first month's rent. Williams then stole a key to the house after earlier seeing where the key was hidden. Without making any such payment, Williams moved his family and various pets into the New Preston home and, until being arrested for trespass and ejected by the police, caused extensive damage to the premises, which included the following:
Floors, furnishings, and walls had been scuffed, chipped and marred.
Dried pet urine and feces coated rugs, floors, furniture, kitchen tops and cabinets, bedding, and other surfaces.
Fleas from the pets left there infested the house and deck.
Dried blood was spattered on fabrics and hard surfaces throughout the house.
Garbage, food and drink spills lay on floors, counters, and furnishings.
An intense stench from the animal excretions permeated the house.
After learning that the Williams family was trespassing at her home, the plaintiff called Houldin on July 5, 2002, and told him. He told her filing an insurance claim was premature until she knew whether and to what extent the property was damaged. After the plaintiff re-entered the premises in mid-July and saw the extent of the damage the Williamses had caused, she again called Houldin and told him that the Williamses had caused damage to the property. On July 17, 2000, he reported her claim to Cambridge Mutual. In her phone call to Houldin reporting the damage, Ehsan asked him to come to the premises to view the damage but he declined. When she did not immediately hear from a representative of the company, she repeatedly called Houldin to complain and asked him to come view the damage at the premises.
Once the Williamses had been ejected, the plaintiff, aided by her housekeeper, Nadine Napolitano, entered the premises, inspected and catalogued the damage, and began the process of soliciting repair estimates and making repairs. Napolitano did much of the internal cleaning, and her son repainted the walls and tried to repair certain floor damage. Timothy Barker, an insurance adjuster hired by Cambridge to assess the claim, called the plaintiff on Friday, July 21, to arrange to see the premises, but there was no answer and he left a message on her answering machine. She returned his phone call the following Monday, July 24, and told Barker to contact Napolitano. He called Napolitano and they agreed to meet at the New Preston home on July 27 at 12:30. By some fluke, either Napolitano or Barker got the appointment time confused, and they arrived there at different times and missed each other.
When Barker next spoke with the plaintiff on July 31, she told him that many repairs were already done and he asked that she send him estimates of the damage and any repair invoices. At that point she did not have such invoices from Napolitano and so sent him a five-page list of damages and estimated repair costs that she and Napolitano had prepared, a copy of a statement she had given to the police, and certain photographs of the claimed damage. Because he had learned that many of the repairs had been completed and he was working on other jobs, Barker waited to make a second appointment with the plaintiff until September 5, when he and another adjuster went through the house.
Barker made no additional requests of the plaintiff for documentation of repair estimates or expenses. The next time the defendants made such a request was in mid-October 2000, when defense counsel requested the plaintiff to attend an examination under oath, as permitted under the policy, and to bring documentation of the damages, repair estimates, and repair expenses. After the EUO, conducted in February 2001, the company formally denied the plaintiff's claim in a letter dated March 22, 2001. That letter cited three reasons for the denial: that "there is no coverage . . . because the property . . . was not Ms. Ehsan's residence premises"; that she violated policy conditions by not showing the damaged property to the company, by making repairs and discarding damaged property before the company could inspect the damage; and that she misrepresented the value of certain repairs, thereby voiding any coverage.
B. Claims and Defenses
1. First count of complaint — breach of contract
The first count of the complaint alleges breach of contract. The defendants admit many of the essential allegations of that count — that plaintiff purchased from the defendants an insurance policy entered into evidence as plaintiff's Exhibit 1. The policy issued by the defendant carrier was a homeowners policy that designated the "premises covered" as "located at 1 Tinker Hill Rd New Preston CT 06777." There is no dispute that the defendant carrier has refused to pay the plaintiff for the damages that she claims the Williamses caused. The disputes in coverage arise from various claims raised by defendants and discussed below.
In an action for denial of coverage under an insurance policy, the insured has the burden of demonstrating that she was entitled to coverage.
It has become the established law of this State one instituting an action upon an insurance policy is only obliged to allege in his complaint in general terms, that the various conditions precedent stated in the policy have been fulfilled; that it is then incumbent upon the defendant by way of special defense, to set up such failures to comply with such conditions as it proposes to claim; that the burden rests upon the plaintiff to prove compliance with the conditions so put in issue, but that, as to other conditions precedent compliance is presumed, without offer of proof by the plaintiff.
Young v. American Fidelity Insurance Company, 2 Conn. App. 282, 285, 479 A.2d 244 (1984). In this case, defendants claim several different policy conditions with which they claim that the plaintiff did not comply: coverage for a residence premises, duty to provide prompt notice of loss, and duty to show the property as often as the company reasonably requires. On each of these policy conditions, plaintiff bears the burden of proof. Young v. American Fidelity Insurance Company, 2 Conn. App. 282, 479 A.2d 244 (1984). On the question of policy exclusions or fraud, misrepresentation or concealment of material facts, however, any of which void coverage, the insurer bears the burden of proof by preponderance of the evidence. Id. at 285-86; Rego v. Connecticut Insurance Placement Facility, 219 Conn. 339, 340, 593 A.2d 491 (1991). For the reasons set forth below, the court finds in favor of plaintiff on the first count of the complaint for breach of contract and against defendant on its first through fifth special defenses directed against that count.
The defendants' fourth special defense, relying on a policy exclusion for damage caused by wear and tear, marring, and deterioration, is discussed in the section on damages.
a. Fifth special defense: Concealment and misrepresentation
At trial the defendants mounted a vigorous assault on the plaintiff's honesty and credibility. Their fifth special defense "claim[s] concealment and misrepresentation by Ms. Ehsan both in her application for insurance and in the presentation of the claim." (Def.s' Post-Trial Brief, at p. 10). The parties do not dispute the relevant law governing this claim, as recited in defendants' brief but vigorously contest whether the facts support such a defense here. As stated below, the court finds that defendants did not sustain their burden of proof of establishing their fifth special defense that plaintiff deliberately misrepresented material facts, concealed material facts, made false statements or engaged in fraudulent conduct in submitting her claim, at her examination under oath, and in applying for the insurance.
Most of the defendants' claims of concealment or misrepresentation by the plaintiff rely on inconsistencies in the plaintiff's testimony or statements, between portions of her testimony and that of other witnesses and in certain aspects of documents she prepared or submitted to the company. Although the plaintiff obviously had an interest in the outcome of the proceedings, the court found her testimony credible and generally consistent. Not every minor inconsistency in testimony shows a fraudulent intent; rather, the trier of fact must determine, from all the circumstances, whether an inconsistency or contradiction in testimony is a mere mistake, error of recollection, or failure of memory, as opposed to a deliberate misrepresentation intended to mislead another: As the standard instruction has long stated, it is the quality of evidence, not the quantity of evidence, that counts. See Wright and Ankerman, I Connecticut Jury Instructions ( Civil) (4th ed., 1993), Sec. 15, p. 27. "The weight of the evidence is not determined by the number of witnesses for or against any one proposition." Cooke v. United Aircraft Corporation, 152 Conn. 214, 218, 205 A.2d 484 (1964). In this case, the court finds no fraud, or intentional concealment or misrepresentation by the plaintiff in applying for the insurance policy or presenting her claim.
The court also had ample opportunity to assess the credibility of the other witnesses who testified. While the court does not adopt in full the plaintiff's claim that "there were so many inconsistencies and outright falsehoods in Nadine Napolitano's testimony that none of it could be believed"; Pl's trial brief at 4; on key points of discrepancy between her testimony and that of the plaintiff, the court found the plaintiff more credible. As is more fully discussed below, the court also found the testimony of the claims adjuster not fully credible.
The court views certain of plaintiff's testimony that defendants claim to be examples of misrepresentation, moreover, as the result of normal human memory processes. The court attributes most of the so-called inconsistencies to normal lapses of plaintiff's memory, defendant's hypertechnical analysis of transcripts and documents, defendant's failure to consider the full context of a statement, and plaintiff's language difficulties.
In arguing that the plaintiff concealed her true intent "to rent the property from the outset" when she purchased the homeowner's policy, for example, the defendants' trial brief points to a statement she made at the examination under oath that she bought the New Preston property as an investment rental property, while ignoring the following testimony three lines below in the transcript:
Q Let me ask you this, did you ever live in the [New Preston property]?
A Not yet.
Q Do you intend to live in that property?
A Probably. I am thinking of maybe I switch from Cornwall to that. I'm just not sure yet. And also I'm trying to rent it.
Def.s' Ex. 2 at 7.
A similar exchange occurred on the second day of the EUO:
Q Did he [Houldin] ask you whether you were going to be residing in the house yourself at all?
A Yes, he did.
Q What did you say?
A. I said no.
Q Did he explain to you that there was a difference in the insurance when you were going to reside in the house or when you were just going to be renting it?
A Yes, he did.
. . .
Q . . . At the time you were buying the house then, you had discussions with them about whether you needed specific insurance because you were going to be renting the property or different insurance if you were just going to be owning it, is that your understanding of the way the discussions went?
A Yes, but at the time I bought it I wasn't sure when I was making it, the policy, I wasn't sure if I'm going to keep this house or the other house and with that discussion in mind he said why don't you just have it as a home owner insurance and then whenever you rented it you can switch it.
Id. at pp. 120, 123.
It was obvious from the plaintiff's testimony at trial that English is not her first language. It was also obvious that she did not always fully understand the full connotation of words used in questions asked to her. Several times, when it was apparent to her that she did not, she informed the lawyer questioning her of that fact and qualified her answer accordingly. In evaluating the plaintiff's testimony and credibility, however, the court has, in view of the semantic and syntactical problems, taken care to consider each individual piece of her testimony in the context of everything else she said. Although the plaintiff said she never "lived" at the New Preston home, for example, the court did not construe that to mean she had never stayed there, since the court found credible her testimony that she in fact spent several weekends there.
The defendants' claims of fraud by the plaintiff can be roughly grouped into three general categories: when she told Houldin that she was unsure which Connecticut property she was going to use as an investment rental, when she presented her claim for damages end repairs to Cambridge Mutual, and when she testified at an examination under oath conducted in February 2002 by defense counsel.
Cambridge claims that the plaintiff "purchased this property with the intent of using it as an investment property." (Def.s' Post-Trial Mem. at 1.) Since a more expensive Dwelling and Fire Policy is necessary for rental property, the company asserts that she thus concealed and misrepresented a material fact when procuring the homeowner's policy. To the contrary, the court has already found that the plaintiff fully and accurately disclosed her undecided plans at the time she obtained the homeowner's policy.
Peter Houldin himself admitted at trial that the plaintiff never explicitly requested any specific insurance policy provisions. As both the plaintiff and he testified, Ms. Ehsan initially discussed the New Preston home with him as a rental property, but during that conversation she also informed him that she was uncertain which of the two Connecticut homes would end up as rental property and which as her weekend residence. As Houldin acknowledged at trial, he then recommended she obtain a homeowner's policy and told her to convert the policy to a Dwelling and Fire Policy if and after that she began renting the property out. He also testified, however, that short-term incidental rentals are permitted under the homeowner's policy, and that the significant event requiring the plaintiff to switch her coverage was not advertising the property for rental or holding the property out for rental but actually renting the premises for other than short-term, incidental usage.
The company also claims that the plaintiff "set out on a course to conceal the true extent of her damage by quickly having it repaired and not providing the company with" adequate proof of those damages. ( Id. at 2.) Although the plaintiff began making repairs, the court finds that it was not her purpose in doing so to conceal the extent of damages from the company. In fact, she repeatedly asked Houldin to come view the damage, but he declined to do so. She told him that she needed to repair the damage as soon as possible in order to be able to rent the house out for the summer. The plaintiff reasonably viewed the summer rental value of the New Preston home as approximately $25,000. Her real estate agent had procured a prospective August rental of $9,000; but because of the uncertainty as to when the premises would be available, that tenant backed out even before the Williams family had completely removed all their goods. Ehsan did not want to lose other possible rental income. The insurance policy itself limited coverage for lost rental income resulting from "loss of use of the premises" to "the shortest time required to repair or replace the damage . . ." (Pl.'s Ex. 1, Coverage D — Loss of Use, p. 3 of 18.) Under those circumstances, the court finds credible the plaintiff's testimony that she began repairing the damage in order to be able to limit her loss of potential rental income.
The defendants maintain that estimates and repair costs submitted by plaintiff were "figures she knew bore no relationship to the cost of repairs" and that she attempted to obtain "invoices or estimates that would support not the actual amounts she paid [for repairs] but the inflated figures . . ." (Def.s' Post-Trial Brief at 15-16.) Although the defendants challenge the repair estimates that she provided to Barker in early August as "greatly inflated," the court finds to the contrary. The court has reviewed the estimates plaintiff submitted to defendants and the earlier drafts of those estimates prepared by Napolitano and the plaintiff, heard plaintiff's explanations as to how she arrived at the estimates she submitted, and finds that she made them in a good faith effort to fix the cost of repairs or extent of damage.
Throughout the second half of July, the plaintiff and Napolitano contacted various sources to get repair estimates. They collaborated in revising a draft of damages and repair estimates initially prepared by Napolitano. The plaintiff used Napolitano's initial list as a template for the estimate of her damages she sent to Barker on August 1. The plaintiff's explanation that Napolitano advised her to submit the "high range" of estimates does not mean that she submitted estimates that were false or fraudulent. As an architect "with professional experience in giving cost estimates, she used her own background and expertise to evaluate and, in certain instances, revise the estimates she received. Variations in or changes to repair estimates between the various drafts do not establish fraud, but instead show the normal process of revising and refining initial estimates in a preliminary rough draft. The court finds that the information the plaintiff provided to Barker in August was a good faith effort on her part to respond to Barker's request and represented her good faith belief as to the damages she had incurred and her estimates of repair costs. Although she neglected to include in the materials she sent to Barker certain estimates she had received or bills she had paid, the court does not find any intent to deceive or conceal material facts on her part, but simple error.
The defendants also claim that the plaintiff's testimony in her examination under oath was a deliberate effort to conceal information or misrepresent material facts. For example, the company claims that the plaintiff's incorrect testimony at the EUO that there were no other rentals of the premises before or after the squatters left was "designed to affect the insurance company's investigation . . ." ( Id. at 14.) Yet the plaintiff also submitted at the EUO a document stating she had a "previous tenant" at the premises. (Pl.'s Ex. 5 at p. 14.) She had already told her insurance agent that she was renting the premises for ten days in August, after the Williamses left. The court views the plaintiff's testimony of no other tenants before or after the Williams, then, as mistake, rather than fraud. The court finds that defendants did not sustain their burden of proof of establishing by a preponderance of the evidence that plaintiff deliberately misrepresented material facts, concealed material facts, made false statements or engaged in fraudulent conduct in applying for the insurance or submitting her claim. Thus, the defendants fail to establish their fifth special defense.
b. Defendants' claim of no coverage for lack of residency
The defendants claim that the New Preston home was not covered by the homeowner's policy because, they maintain, the plaintiff did not reside there. They rely on that portion of the policy limiting coverage to a "residence premises." Numerous facts here also lead this court to find, however, that the defendant Cambridge Mutual knew, at the time it issued the homeowner's policy here, that the plaintiff did not intend to use the New Preston home as her principal residence but would instead use it as one of her vacation or weekend homes until she had decided which of her two Connecticut homes she would rent out for investment purposes. The Declarations Page of the policy designated "the premises covered by this policy" as "located at 1 Tinker Hill Rd New Preston" but also identified the "address" of the plaintiff as in New York City. Moreover, the plaintiff told Houldin that New York City would remain her principal place of residence and that the New Preston home would not be her primary residence. She told him that she was unsure which of her Connecticut homes she was going to keep for her permanent weekend home and which one she would rent out for investment purposes. This information was all communicated to Houldin within the scope of his authority, which he admitted at trial was to provide the correct policy to Ehsan based on what she told him.
The law on construction of insurance policies is summarized well in a case cited by defendants, Sponzo v. Hartford Underwriters Insurance Group, Superior Court, judicial district of Hartford/New Britain at Hartford, Docket No. CV940543134 (March 15, 1996, Aurigemma, J.):
An insurance policy is to be interpreted by the same general rules that govern the construction of any written contract and enforced in accordance with the real intent of the parties as expressed in the language employed in the policy. If the insurance coverage is defined in terms that are ambiguous, such ambiguity is, in accordance with standard rules of construction, resolved against the insurance company. Where the terms of the policy are of doubtful meaning, the construction most favorable to the insured will be adopted. If however, the words in the policy are plain and unambiguous the established rules for the construction of contracts apply, the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning, and courts cannot indulge in a forced construction ignoring provisions or so distorting them as to accord a meaning other than that evidently intended by the parties.
(Quotations omitted; citations omitted.)
The plaintiff does not claim that the New Preston home was her principal place of residence. The question this case raises is whether the policy covered the plaintiff's weekend use of the premises. There are several relevant provisions of the policy:
The second page of the policy states " We cover: 1. The dwelling on the residential premises shown on the Declarations . . . (Pl.'s Ex. 1, Section I — Property Coverages — Coverage A — Dwelling, p. 1 of 18.)
The policy defines the term " residence premises" in pertinent part, as follows:
a. The one family dwelling, other structures, and grounds, or
b. That part of any other building;
where you reside and which is shown as the "residence premises" in the Declarations
( Id., Definitions, ¶ 8, p. 1 of 18.)
The "Definitions" section defines the term " insured location" to mean one of eight alternatives, Three of which are relevant here:
a. The "residence premises"
b. The part of other premises, structures and grounds used by you
(1) Which is shown in the Declarations; or
(2) Which is acquired by during the policy period for your use as a residence;
Any premises used by you in connection with a premises in 4.a or 4.b. above;
( Id., Definitions, ¶ 4, p. 1 of 18.)
The front Declarations Page of the policy designates the " named insured and address" as the plaintiff and her New York City address. It specified that " the premises covered by this policy is located at 1 Tinker Hill Rd. New Preston CT 06777." ( Id., Part B Declarations Page, p. 1.)
The defendants claim that these policy provisions exclude coverage for the New Preston dwelling because the plaintiff did not reside there. Although the policy does not define the terms "reside" or "residence," it is clear that the policy does not require that the insured premises be the plaintiff's principal place of residence. The portions of the policy covering the dwelling (Coverage A) or its contents (Coverage B) do not exclude coverage for seasonal, vacation, or secondary residences. The policy does limit the company's liability for loss of use (Coverage D) " if the `residence premises' is not your principal place of residence" but contains no such limitation on coverage for damage to the dwelling (Coverage A) or to its contents (Coverage B).
Coverage D provides different loss of use coverage depending on whether the "residence premises" where the damage occurred was the insured's principal place of residence.
COVERAGE D — Loss of Use The limit of liability for Coverage D is the total limit for all the coverages that follow. 1. If a loss covered under this Section makes that part of the "residence premises" where you reside not fit to live in, we cover, at your choice, either of the following. However, if the "residence premises" is not your principal place of residence, we will not provide the option under paragraph b. below. a. Additional Living Expense, meaning any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living; or b. Fair Rental Value, meaning the fair rental value of that part of the "residence premises" where you reside less any expenses that do not continue while the premises is not fit to live. Payment under a. or b. will be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time required for your household to settle elsewhere. 2. If a loss covered under this Section makes that part of the "residence premises rented to others or held for rental by you not fit to live in, we cover the: Fair Rental Value, meaning the fair rental value of that part of the "residence premises" rented to others or held for rental by you less any expenses that do not continue while the premises is not fit to live in.
Payment will be for the shortest time required to repair or replace that part of the premises rented or held for rental.
( Id., Coverage D — Loss of Use, p. 3 of 18.) Paragraph one of Coverage D provides coverage for additional living expenses even if the residence premises is not the insured's principal place of residence. The second paragraph provides coverage for additional living expenses and fair rental value for that part of the residence premises rented out or held for rental, irrespective of whether the residence premises is the insured's principal place of residence.
On cross-examination, Peter Houldin, testifying as a witness for the defendants, admitted that the policy the company issued was an appropriate one for the New Preston home under the circumstances found by the court here. The only logical reading of all the policy provisions is that it covered the New Preston home as a secondary or weekend home for the plaintiff. Although the Bolivar case cited by defendants in their brief dealt with somewhat similar policy provisions, the factual scenario there was distinctively different. The court found there that the policy required the insureds to reside at the premises. In that case, there was no evidence that plaintiffs had ever resided at the relevant address. The case did not raise the issue presented here as to whether a seasonal, part-time, or weekend home is covered under such a homeowner's policy. The court's opinion there does not address "loss of use" provisions such as those found here. Bolivar v. Blue Ridge Insurance Company, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV980353522 (October 19, 1999, Skolnick J.) In two other cases cited by defendants, Heniser v. Frankenmuth Mutual Insurance Company, 449 Mich. 155, 534 N.W.2d 502 (1995), and Grange Mutual Casualty Company v. Demoonie, 227 Ga. App. 812, 490 S.E.2d 451 (1997), the issue was whether a homeowner's policy required the insured to reside in the premises, and neither dealt with the issue raised in the present case as to whether seasonal or weekend usage qualifies as a residence premises.
The policy's varying use of the term " residence premises" dictates, at minimum, under the principle of construing ambiguity against the insurer, that the policy be deemed to cover the New Preston home. The policy states that it provides coverage for the "dwelling on the residential premises shown on the Declarations." The policy defines the term " residence premises" as a dwelling or building " where you reside" and "which is shown as the `residence premises' in the Declarations." Despite the reference in both the statement of coverage and definition of residence premises to a dwelling identified as a " residence premises in the Declarations," no dwelling or building is identified as such on the Declarations Page. The Declarations designate the New Preston home as the " premises covered by this policy," and an address in New York City as the plaintiff's address. Moreover, the New Preston home arguably fits within the policy's definition of " the insured location" — either as a " residence premises," or as " [t]he part of other premises, . . . used by you . . . Which is shown in the Declarations . . ." Finally, the various limiting phrases used to qualify " residence premises" for purposes of defining coverage for loss of use strongly suggest that a residence premises need not be the insured's principal place of residence in order to be covered.
The law deems that the information that the plaintiff told to Houldin when she obtained her policy was communicated to and in the knowledge of the defendant Cambridge Mutual at the time it issued the policy.
Information communicated to or knowledge otherwise obtained by an agent within the scope of his authority — while he is acting in a matter in which he is required or authorized to act and the information is necessarily incident to that matter and affecting the liability of the company — is knowledge of the principal, the insurer.
Mackay v. Aetna Life Ins. Company, 118 Conn. 538, 548, 173 A. 783 (1934). This unexceptional principle derives from basic rules of agency. See Restatement (Second), Agency, § 268. Thus, even if the policy did not cover the New Preston home because not the plaintiff's "residence premises," the defendants have waived or are estopped from relying on any such provisions of the policy.
Section 268 provides as follows:
(1) Unless the notifier has notice that the agent has an interest adverse to the principal, a notification given to an agent is notice to the principal if it is given:
(a) to an agent authorized to receive it;
(b) to an agent apparently authorized to receive it;
(c) to an agent authorized to conduct a transaction, with respect to matters connected with it as to which notice is usually given to such an agent, unless the one giving the notification has notice that the agent is not authorized to receive it;
(d) to an agent to whom by the terms of a contract notification is to be given, with reference to matters in connection with the contract; or
(e) to the agent of an unidentified or undisclosed principal with reference to transactions entered into by such agent within his powers, until discovery of the identity of the principal; thereafter as in the case of a disclosed principal.
(2) The rules as to the giving of notification to an agent apply to the giving of notification by an agent.
The fourth count of the complaint claims that Cambridge Mutual "cannot enforce the exclusions set forth in the insurance contract for the reason that its agent Ericson, through its agent servant or employee, Peter Houldin, waived those exclusions in the insurance policy as they related to this plaintiff." (Pl.'s Supp.Rev.Am.Comp., Fourth Count, ¶ 17.) Technically, as a matter of law, neither Houldin nor Ericson waived the exclusions; but as stated in the text, their knowledge of plaintiff's uncertainty of usage, that she would maintain her New York City home as her principal residence, and that her Connecticut residence would only be a seasonal or weekend home are all imputed to Cambridge, which is deemed to have waived any exclusions that might be based on any of these facts. This claim is not properly a separate cause of action but merely a defense to any claims of exclusion under the policy based on facts known to the agent at the time of selling the policy. Thus the court, sua sponte, strikes the fourth count of the complaint, for not stating an independent cause of action, and enters judgment for defendants on that count.
When the insurer, at the time of the issuance of the policy, has knowledge of existing facts which, if insisted on, would invalidate the contract from the time of its inception, it may be held, by delivering the policy and accepting the premium, to waive the cause of avoidance or to be estopped from insisting upon or taking advantage of it.
Mackay v. Aetna Life Ins. Company, supra, 118 Conn. 548.
The defendants also claim that any use of the New Preston home by the plaintiff had ended by the time the Williams family occupied the property. In support of that assertion, they argue that as of "that time she had offered the Williams a lease which would not expire until the following Memorial Day (2001) . . . she had not been staying at the property since it had been rented." (Def.s' Post-Trial Mem., at 5.) The evidence did not, however, so establish. Ms. Ehsan did offer Williams a lease, but only on conditions never accepted by him: advance payment of rent plus security deposit. The plaintiff refused either to sign the lease or to permit him early occupancy of the premises because he did not make either of the payments that were both a condition of his tenancy. Between the time she purchased the house and the Williamses began trespassing, Ms. Ehsan visited the property most weekends, stayed there herself and with her family on occasions, spent one entire week there, and held certain parties there; but the evidence did not disclose the dates of any of these occasions. During the six months between her purchase of the premises and its invasion by squatters, the evidence showed a regularity of usage consistent with what plaintiff told Houldin and which defendants have waived, or are estopped from asserting as a basis of claiming no coverage.
In support of that proposition, defendants cite Sponzo v. Hartford Underwriters Insurance Group. In Sponzo, the policy holder moved from a home located at 36 Strawberry Road to one at 71 Strawberry Road and notified his insurance broker of the change in his place of residence. The broker notified the insurance company, which amended the policy to reflect the new address. The insurance company was under the mistaken impression that the change of address merely reflected a change in numbering for the same property. After renting out his former residence, the insured made a claim for water damage there under his homeowner's policy. The court nonetheless granted summary judgment to the defendant because the damaged premises was no longer the insured's residence. As applied here, Sponzo merely stands for the proposition that a dwelling is no longer an insured "residence premises" after the homeowner moves out and no longer resides there. It does nothing to advance the inquiry as to when someone resides somewhere and whether a weekend home is a "residence premises."
Moreover, not having proven when or for how long plaintiff stayed at the premises or left it vacant defendants have not sustained their burden of proof for their third special defense, which relied on a policy provision excluding coverage for loss covered by vandalism or malicious mischief in a property that is vacant for more than thirty days. (Pl.'s Ex. 1, Section I — Perils Insured Against — Coverage A — Dwelling and Coverage B — Other Structures, ¶ d; p. 7 of 18.) See Young v. American Fidelity Insurance Company, 2 Conn. App. 282, 285-86, 479 A.2d 244 (1984). ("[T]he burden of proving an exception to a risk is on the insurer . . . The object of an exception is to exclude that which would otherwise be included, to take special cases out of a general class . . . By `exception' of course is meant an exclusion of one or more of the risks otherwise generally insured against . . ." (Citations omitted; internal quotation marks omitted.))
The defendants are also estopped from claiming, or have waived their right to assert, that plaintiff no longer resided there, under the facts of this case. They knew, at the time they sold her the policy, that she was unsure which property she would use as investment property. Cambridge Mutual is deemed to know, from what Ehsan told Houldin, that her usage of the premises would be episodic. Houldin told her that a homeowner's policy was appropriate until she started renting the property for investment purposes. The company is deemed to know that also, and its policy does not provide otherwise. Thus, Cambridge Mutual is estopped from, or has waived, arguing that plaintiff's regular weekend usage — whether she stayed there overnight most or every weekend, or visited there most weekends but only stayed overnight on some weekends — disqualifies her from coverage, as such usage is consistent with what she told Houldin about her intentions for the property, and is the basis on which he sold her the policy.
c. First special defense: Plaintiff's duty to provide prompt notice of loss
The policy issued by the defendants required the plaintiff to "[g]ive prompt notice to us or our agent" of "a loss to covered property." (Pl.'s Ex. 1, Section I — Conditions, ¶ 2a, p. 9 of 18.) The defendants' first special defense, claiming a breach of this provision, may be disposed of summarily. The evidence established that plaintiff met this duty and gave prompt notice of her loss to Houldin, an agent of Cambridge Mutual, and that Houldin in turn notified the carrier.
d. Second special defense: Plaintiff's duty to show the damaged property
Under the policy, the plaintiff was required to show the damaged property "[a]s often as we reasonably require." (Pl.'s Ex. 1, Section I — Conditions, ¶ 2f (1), p. 9 of 18.) Ehsan began making repairs to the property soon after notifying Houldin of the damage. She asked him to come view the damage but he refused to do so. She misunderstood her conversation with Houldin and thought he told her to begin making the repairs. Barker, the adjuster for Cambridge Mutual, did not go to the property to view the damage until July 27, ten days after she notified Houldin of the damage. By that time, and by two days later, when the adjuster and Napolitano missed each other at the premises, certain of the repairs had been completed. One area of damaged floor had been buffed, the walls had been painted (although not completely), caked and dried feces and urine had been cleaned and removed from floors and other surfaces, furniture fabric and bedding coated with dried blood, animal excrement and urine had been thrown away, the alarm system repaired to provide security. She had also discarded trash, garbage and debris strewn by the Williamses throughout the premises. Considerable work remained, however, and some was never done. The plaintiff took photographs of the damage and debris.
Ehsan testified at trial that Houldin told her, when she called him in mid-July to report the damages, to begin making repairs immediately and send him the bills. Houldin denied making such a statement, and on this particular point, the court finds Houldin's testimony more probable, but not because the court finds the plaintiff to have been deliberately misstating the facts in her testimony. From the court's overall observations at trial, the court concludes that Ms. Ehsan's memory as to specific details of conversations and their dates was sometime faulty, but not fraudulent.
The court finds credible Houldin's testimony that it was not his custom to evaluate the validity of claims with his clients. Ehsan was very upset when she called Houldin, understandably so, because of the damage in her home. From the testimony that Napolitano and she gave about the various dates they were at the premises after Williams left and their preparation of the various drafts of the list of damages and repair estimates, the court concludes that the plaintiff's recollection is not completely accurate as to exactly who said or did what on which days in the those very trying days after her discovery of the damage.
The plaintiff's son, Bryan Babek, testified that he was standing next to his mother during her telephone conversation with Houldin, and that Ehsan repeated contemporaneously to him that Houldin told her that she could make repairs so that she could rent the place out soon, and that photographs would be suitable proof of the damage. The court observed several examples, in the transcript of the examination under oath and at trial, where the plaintiff's syntax, usage of language, and somewhat limited command of English vocabulary affected her ability to make herself understood or to comprehend the precise meaning of questions put to her. The court finds that Ehsan and Houldin discussed the rental issue and repairs, but finds Houldin credible that he did not specifically tell her to begin making repairs. The court finds Ehsan credible that she believed that Houldin had directed her to do so, but that she was mistaken in that belief.
As for the remaining portion of that conversation, the plaintiff also testified that Houldin told her to send him the repair bills. The plaintiff's actions during that period show her diligently trying to assess and rectify the damages. If Houldin had actually asked her to send him the repair bills, she would have done so; thus the court concludes that he did not do so, and that plaintiff was mistaken in her testimony that Houldin told her to send him the bills. It was the adjuster Barker, not the agent Houldin, who asked her some days later for copies of bills and estimates. Since she did not meet either of them in person until much later, her confusion as to who made this request and when is understandable in light of the stress she was under.
The defendants' second special defense claims that these facts demonstrate a breach of the plaintiff's duty to show the property "as often as we reasonably require." In reciting that requirement, however, defendants overlook another policy provision limiting coverage for loss of use of "that part of a residence premises rented to others or held for rental by you." (Pl.'s Ex. 1, Section I — Property Coverages — Coverage D — Loss of Use, ¶ 2, p. 3 of 18.) Even though Ms. Ehsan had not yet actively rented the New Preston property on a long-term basis, she was advertising it and holding it out for rental by June 2000. Under the factual scenario here, the New Preston properly was thus a "residence premises" which (a) was not Ehsan's principal place of residence" and (b) was being held out for rental to others. For such property, the policy limited certain coverage for loss of use to "the shortest time required to repair or replace that part of the premises rented or held for rental." She could legitimately have construed the policy to preclude her from recovering any lost rent if she did not begin the repairs immediately. By the time Williams vacated the premises, the plaintiff had already lost one prospective tenant, who agreed to rent the premises for August for $9,000 but went elsewhere because the plaintiff could not assure her she would have the premises ready for early occupancy in late July. The plaintiff began making repairs immediately so that she could have the premises available for rent to other possible tenants as soon as possible. By doing so, she got the house ready for a ten-day rental in late August, for which she received $3,000.
At minimum, such language created an ambiguity regarding the plaintiff's duties here. The section of the policy on Coverage for Loss of Use, quoted in footnote two above, could reasonably have led plaintiff to believe that her use of the New Preston home was covered under that portion of the policy, particularly in light of the fact that Houldin had told her, when she procured the policy, that a homeowner's policy was appropriate for the property and that it would cover short-term rentals in the period while she was deciding which of her Connecticut properties she would keep as her vacation home and which she would rent out for long-term investment purposes. Since any such ambiguities in the language of the policy must be construed against the carrier, complying with her duties under the loss of use provision could not be considered a breach of her other duties.
The policy requires an insured to show the damaged property but does not specifically preclude the insured from making repairs. If the carrier had immediately inspected the premises after Ehsan notified Houldin of the damage, the carrier could have seen much of the damage before or during the repairs. The defendants appear to be arguing that plaintiff should have allowed the feces, urine and blood-covered surfaces in her home to remain in that condition for almost two weeks. The noxious odor caused by the garbage and dried body excretions in the premises was intense. She called Houldin several times to ask him to come view the damaged property, but he declined to do so. Although Barker's ten-day delay in initially going to the premises may not have breached the insurer's covenant of good faith and fair dealing, because not done in deliberate bad faith, that interval placed plaintiff in an intolerable dilemma. It is plain common sense that the longer she waited to clean the dried bodily excretions, the more difficult the cleaning, the worse the smell, and the potential for more permanent damage would increase. If she had not had the alarm system repaired, theft or more damage was possible since she did not live there continuously.
It was thus reasonable for Ehsan to begin cleaning and repairs. Her doing so, moreover, caused no prejudice to the company. Although the adjuster, Barker, claimed on direct examination that his ability to do his job was affected by the repairs because he could not later determine the extent or cause of the damage or cost of repairs, the court did not find his testimony on this point credible. Somewhat misleading statements he provided to the insurance commissioner, in response to a complaint filed by plaintiff, undermined his credibility as a witness. He admitted on cross-examination that the repairs did not make it impossible for him to carry out his job and that he could inspect photographs and interview witnesses and that he had other cases where repairs had been made before he began his job. The court itself had an opportunity to view the photographs and hear from the two persons with the most knowledge about the damage done by the Williamses and finds that such evidence adequately showed the damaged property (although, as set forth later, it did not adequately prove all her claims for damage).
The policy provision requiring an insured to allow the company to view the damaged property, is, like one requiring prompt notice of a loss, intended to give the insurance company a full and reasonable opportunity to assess damage and coverage. Just as breach of a duty to provide prompt notice relieves an insurance company of liability only where such a delay causes material prejudice to the carrier; Aetna Casualty Surety Company v. Murphy, 206 Conn. 409, 413, 538 A.2d 219 (1988); the same rule should apply to a claim of failure to allow the company to view the damaged property as often as it reasonably requires.
First the contractual provisions presently at issue are contained in an insurance policy that is a "contract of adhesion," the parties to this form contract having had no occasion to bargain about the consequences of delayed notice. Second, enforcement of these notice provisions will operate as a forfeiture because the insured will lose his insurance coverage without regard to his dutiful payment of insurance premiums. Third, the insurer's legitimate purpose of guaranteeing itself a fair opportunity to investigate accidents and claims can be protected without the forfeiture that results from presuming, irrebuttably, that late notice [or not showing the property as often as reasonably requested] invariably prejudices the insurer.
Id. at 415-16. Thus, even were this court to conclude that plaintiff did not comply with her duty to show the property as often as requested, since there is no prejudice to the company here on the facts of this case, forfeiture of coverage is not an appropriate remedy for such a breach. Taricani v. Nationwide Mutual Insurance Company, 77 Conn. App. 139 (2003) (no loss of coverage if noncompliance with insurance policy cooperation clause causes no prejudice to the defendant).
The court thus rejects the second special defense for several reasons. The plaintiff made the property available to the defendants when they so requested. The mix-up between Napolitano and the adjuster was not Ehsan's fault. The policy itself placed a duty on Ehsan to begin making repairs to minimize any loss of rent. Under the circumstances of this case, including the nature of the damage and the delay before the company attempted to view the damaged property, removing the garbage and debris, cleaning or removing material coated with blood, urine, and excrement (which included portions of the walls and floors), and taking photographs of such damage complied with plaintiff's duty to show the property as often as the company reasonably required. Finally, there is no prejudice to the company since the photographs and testimonial evidence provide an adequate means to assess damage and evaluate the claim for coverage (and where not sufficiently establishing such damage, then the plaintiff does not recover).
2. Second count — Breach of implied covenant of good faith and fair dealing
Under Connecticut law, an insurance "contract carries with it an implied covenant of good faith and fair dealing, the bad-faith violation of which is actionable in tort." ShareAmerica, Inc. v. Ernst Young, Superior Court, judicial district of Waterbury, Docket No. 150132 (July 2, 1999, Sheldon, J.). Verrastro v. Middlesex Insurance Company, 207 Conn. 179, 190, 540 A.2d 693 (1988). Although no appellate court has specified the elements necessary to prove such a claim, this court joins the chorus of trial courts adopting those set forth in ShareAmerica, Inc. v. Ernst Young:
See, e.g., Fairfield Financial Mortgage v. Salazar, Superior Court, judicial District of Danbury Docket No. CV000339752S (April 23, 2002, Moraghan, J.).; DSM Inc. v. Sentry Select Insurance Co., Superior Court, judicial District of Litchfield at Litchfield, Docket No. CV010085405S (March 22, 2002, DiPentima, J.) ( 31 Conn.L.Rptr. 650); Ainsworth v. Lexington Partners, Superior Court, judicial District of New Britain at New Britain, Docket No. CV 9804897015 (June 29, 2000, Shortall, J.); Turner v. Allstate Insurance, Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. 177471 (Dec. 8, 2000, Mint, J.) ( 28 Conn.L.Rptr. 485); Pine Creek Partners, LLC v. Seaman, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV990364880 (December 20, 2000, Skolnick, J.).
first, that the plaintiff and the defendant were parties to a contract under which the plaintiff reasonably expected to receive certain benefits; second, that the defendant engaged in conduct that injured the plaintiff's right to receive some or all of those benefits; and third, that when committing the acts by which it injured the plaintiff's right to receive benefits it reasonably expected to receive under the contract, the defendant was acting in bad faith.
The plaintiff asserts two factual bases to support her claim that the defendants breached the implied covenant — that Cambridge Mutual failed to adjust the claim promptly and in the defendants' assertions of certain special defenses that plaintiff claims to have no factual merit.
The plaintiff did not sustain her burden of proof to establish the third element necessary to prove this claim that the defendants acted in bad faith. Although the court has found against defendants at trial on related legal and factual claims, there were legitimate issues here to investigate and evaluate — for example, whether, in light of the facts that a prospective tenant had caused the damage and that the plaintiff was claiming damages for lost rental income in August, plaintiff was using the New Preston home as a residence premises at the time of the claimed damage, and evaluating the plaintiff's submissions as to the damage and repair estimates. Nor, on the factual circumstances of this case, does the court find evidence of bad faith in the defendants' assertion of the various special defenses. The court has found for the plaintiff based on its determinations of credibility at trial, but, leaving aside the question whether assertion of defenses can be grounds for a claim of bad faith, does not find the defendants' legal defenses to have been presented in bad faith.
There was conflicting evidence on exactly when the prospective August tenant went elsewhere, but documents prepared by the plaintiff and Napolitano in mid-July already showed that plaintiff had lost that tenancy. See, e.g., plaintiff's exhibit 2, dated July 17, 2000.
There is no evidence that the approximately ten-day interval between the plaintiff reporting her claim by telephone to Peter Houldin and the adjuster's first visit to the premises was motivated by bad faith. After Barker thereafter learned from the plaintiff that she had completed many of the repairs, the interval of approximately five weeks before his next inspection of the premises was not unreasonable and caused the plaintiff no harm. She had already lost the prospective tenant for the full month of August by mid-July. Having learned from the plaintiff that she had already repaired certain damages, Barker did not act in bad faith by contacting the company and awaiting further instruction on how to proceed. In none of this delay is there any evidence of bad faith or of any
conduct designed to mislead or to deceive . . . 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 . . . [,] conscious doing of a wrong because of dishonest purpose or moral obliquity . . . [or] state of mind affirmatively operating with some design or motive of interest or ill will.
Elm Street Builders v. Enterprise Park Condominium, 63 Conn. App. 657, 667-68, 778 A.2d 237 (2001).
3. Third count — Negligent misrepresentation claim against the insurance agency
The third count of the complaint claims negligent misrepresentation by the Ericson Agency. The sole element of negligence alleged in the complaint is that "Peter Houldin, as agent . . . of the defendant, Ericson, negligently misrepresented to the plaintiff that her claim was covered by her insurance policy." (Pl.'s Supplemental Revised Amended Complaint, Third Count, ¶ 17.) Since the court has found that the claim is covered by the policy, the plaintiff's claim in this count fails.
4. Fifth Count — Negligence by Erieson Agency
The fifth count alleges negligence by Ericson Agency, through its agent and employee, Peter Houldin, in the following respects:
Houldin was negligent in selling insurance coverage for the New Preston properly when he knew "the basis for which the plaintiff sought insurance" and "knew or should have known that the defendant, Cambridge, would deny coverage" to the plaintiff; and
Houldin was negligent when he knew or should have known not to instruct the plaintiff to repair the premises and replace damaged property before Cambridge had inspected the damage.
As to the latter, the court has already found that plaintiff did not prove that Houldin told her to begin making repairs or replacing damaged property, and this aspect of her claim fails.
As to the former, Houldin himself admitted at trial that he is responsible for issuing the correct insurance policy based on what a customer tells him. Such testimony, "while sparse, was sufficient to amount to an opinion by one with special knowledge of the sale of insurance on the standard of care to which an insurance agent is held." Todd v. Malafronte, 3 Conn. App. 16, 19, 484 A.2d 463 (1984). Ehsan and Houldin agreed at trial that she told him, when she sought the policy, that she was buying the New Preston property for rental purposes but had become unsure which of her Connecticut homes she would keep as a seasonal home and which she would use as rental property. The court has already found that, at the time she applied for the policy, she was in fact uncertain whether to use the Cornwall or New Preston home as her weekend home. Houldin testified that the policy he sold Ehsan was the proper one based on what she told him. There was no evidence offered to the contrary. The policy itself does not preclude coverage for a second home used exclusively by the policy holder or rented out for short periods on occasion, and Houldin testified that the policy in fact covered both such situations. The court thus finds that plaintiff has not met its burden of proving that Houldin or Ericson breached any duty owed to her. Houldin sold the plaintiff a policy that fit what she described. The court thus finds against plaintiff on the fifth count of the complaint alleging negligence by the Ericson Agency.
Moreover, even if the policy provisions did not cover the New Preston dwelling because it was not plaintiff's residence premises, any negligence by Houldin in selling such a policy caused no damage to plaintiff. As explained in the text above, the insurance company is deemed to know what Ehsan communicated to Houldin when she purchased the policy, and is thus estopped from asserting, or has waived, any defense of no coverage based on the residence premises requirement.
The court also concludes that defendants failed to establish their sixth special defense of contributory negligence. The defendants assert in their brief that plaintiff "was contributorily negligent in obtaining the policy when she had information that it was not appropriate." (Def.s' Post-Trial Brief, at 25.) As a prospective insurance customer, she was responsible to provide accurate and complete information to the insurance company regarding her proposed usage of the premises. The court has found that plaintiff accurately described her uncertain intentions regarding her two Connecticut properties. As Houldin testified, it was his responsibility to sell a policy that corresponded to her described uses of the premises. She properly relied on him to carry out that duty properly. Although another insurance agent, plaintiff's agent for the Cornwall home, told her be could only sell her a Fire and Dwelling policy, there was no evidence as to whether homeowners or Fire and Dwelling policies are standardized in the insurance industry. The evidence did not establish that knowing a homeowner's policy was unavailable from a different insurance agent rendered plaintiff contributorily negligent for accepting such a policy offered to her by Houldin based on her accurate description of her uncertainty about her uses for the property.
III — DAMAGES
The plaintiff claims several elements of damage: damage to the walls, floors, other fixtures, and various items of personal property inside the premises; loss of rental income; and diminished value of the premises. The policy provides coverage for damage to the dwelling, to its contents, to personal property inside, and for lost rental value for "that part of the `residence premises' held rented to others or held out for rental to others." The defendants contest all the damages in general and certain of the damages in particular, as well as raising special defenses to certain damages.
A. Damaged Property
The plaintiff testified that the Williams family did extensive damage to fixtures and personal property at the New Preston home. She paid $11,127.39 for partial repairs of some of that damage and claims an additional amount of approximately $20,000 for repairs either not completed or never started.
The defendants introduced, as part of their exhibit five, the plaintiff's estimates for work not yet undertaken or completed, but offered the estimates in that exhibit for the limited purpose of showing the estimates that plaintiff presented to the insurance company, and not as proof of the actual cost of such repairs. Defendants' exhibit two, which they introduced into evidence as a full exhibit, however, contains plaintiff's testimony in her examination under oath about those same estimates. Defendants introduced the transcript of plaintiff's EUO without any restriction on its evidentiary value or limitation on the use of that evidence. Thus the court had before it, as unrestricted evidence, estimates for certain repairs that the court could consider in determining plaintiff's damages.
The photographic evidence and witness testimony was sufficient to establish the extent of much of this damage. There is conflicting evidence, however, about several claimed damaged items that the court will address.
Damage to wood floors outside the bathroom. There was conflicting evidence as to whether the Williams family caused the water stain damage to the wood floors outside the upstairs bathroom. A shower in the bathroom directed water outside the tub area, onto tile floor, and the water would regularly spill over into the adjoining room with wood floors. The plaintiff testified that there was only minimal such water stain damage before the Williams family. But a few weeks earlier there had been another short-term tenant who could just as easily have caused this damage. Napolitano testified that all this damage existed prior to Williams trespassing, and, after viewing the photographs of the damage and hearing all the testimony on this question, the court finds that the plaintiff's memory on this question was not accurate.
Electric alarm system. The plaintiff introduced photographs showing that the wiring for the alarm system had been pulled from the walls. She testified that the Williamses had caused this and other damage to the alarm system. She called as a witness Arthur Banks, a security alarm technician who upgraded the security system after the Williams family vacated. Although he said that the wiring was torn, he also described part of the work he did as updating the system. Thus the court cannot find that all the work he did was related to wiring damage caused by the Williamses; and as plaintiff does not have more specific evidence as to what portion of his work or repair bill was attributable to wiring damage caused by the Williamses and what portion to a system upgrade, she has not proven recoverable damages for this item.
Damage to a stove. Although plaintiff testified that she believes she needs a new stove because of damage caused by Williams, the testimonial and photographic evidence does not support her claim that the food damage, chipping, cosmetic and other damage caused by the Williamses requires replacing the entire stove. There was no evidence offered as to the cost of more limited repairs to the stove, and thus plaintiff cannot recover for any of this damage.
Painting. Plaintiff paid Napolitano's son to paint, but he did not clean or paint upper portions of certain walls. The entire job needs to be done again.
Rugs. The court does not find credible Napolitano's testimony that the rugs claimed to be damaged by Williams were not there while the Williams family was there.
Although the court concludes that, on some items, the plaintiff's memory was faulty or someone else's memory was more accurate, the court does not find that the plaintiff gave intentionally inaccurate testimony. The court finds that plaintiff proved that the occupancy of the Williams family caused damages in the amount of $25,583.79 to fixtures and personal property in the dwelling ($9,768.79 for repairs incurred or damages already paid for and $15,815 in additional repairs needed).
B. Lost Rent
The plaintiff claims damages of lost rent in two amounts, $25,000 in lost rental for not being able to rent the premises for the three-month summer season, and $9,000 for a lost August rental. There is no doubt that Williams's occupancy of the premises prevented her from having the premises available to rent in June and July, but there is no evidence that anyone would have rented it in either of those months. The plaintiff did lose rental income of $9,000 from a prospective tenant for the full month of August as the result of the Williams's trespass and damage to the premises. She recovered some of that lost rent by renting the home for the last seven days of August (and first four days of September) for $3,000. The lost August rental income must be offset by the portion of income from that end-of-the-month rental attributable to August. Thus the court finds that the illegal Williams family occupancy of her home, and resulting damages caused by the Williamses, caused the plaintiff to lose rental income in the amount of $7,090.91.
C. Diminished value of property — reduced sales price
The plaintiff also claims that when she sold the house in late 2002 she received $100,000 less than its fair market value because "the persons residing in her community knew that the property had been inhabited and damaged by squatters." (Pl.'s Trial Brief, at p. 12.) While diminution in the value of real properly is recoverable as a measure of damages, and an owner of real property is competent to testify as to the value of the property, the court did not find plaintiff's testimony on this point sufficient to prove diminution in value. Too long a time had passed from the time of the squatters to when she sold the property, and there was no evidence as to market conditions or other factors that might affect the value of her property. What other people told her as the reason she could not sell it for the price she thought was a fair market value was not sufficient or credible to establish her claim as to diminished value of the premises.
D. Fourth special defense to first count — policy exclusion for damage caused by wear and tear, marring, and deterioration
The policy excludes coverage for any building damage caused by "wear and tear, marring, and deterioration." (Pl's Ex. 1, Section I — Perils Insured Against — Coverage A — Dwelling and Coverage B — Other Structures, ¶ 2.e. (1), p. 7 of 18.) Since a claim of exclusion, defendants bear the burden of proof on this special defense. In their brief, the only factual claim they made regarding this special defense was that
In general, a policy exclusion for "wear and "tear" or deterioration applies to diminished appearance, quality or functionality of an item arising because of the passage of time and the ordinary and reasonable use of that object over time. Although there is no binding appellate authority in Connecticut defining either of these terms, as the court noted in Waldron v. Richardson, Superior Court, judicial district of Waterbury, Docket No. CV0106334 (November 25, 1992, Barnett, J.) ( 1992 WL 361501), "in jurisdictions where the question has been decided, the decisions appear to be uniform:"
The expression "ordinary wear" applies to situations of gradual determination resulting from use. It does not apply to instances of sudden occurrence. The words "wear and tear" in their everyday common usage mean simply that ordinary and natural deterioration or abrasion which an object experiences by the expected contacts between the objects' component parts and outside objects during the period of the object's life expectancy. "Reasonable wear," "ordinary wear and tear" and similar phrases apply more naturally to the gradual deterioration resulting from use, lapse of time and to a certain extent to the operation of the elements, but do not cover destruction in whole or in part of a structure by a sudden catastrophe. In determining that "wear and tear" which is reasonable, a court must consider the use to which the property was put.
(Citations omitted.)
The present policy nowhere defines the term "marring," but its general dictionary definition of the verb "to mar" includes to "inflict damage, especially disfiguring damage, on, or to [t]o impair the soundness, perfection, or integrity of; spoil." ( The American Heritage Dictionary of the English Language, Fourth Edition Copyright 2000 by Houghton Mifflin Company.) That same dictionary defines the noun form of the word as meaning a "disfiguring mark; a blemish." The term thus has a wide possible range of meaning that could conceivably cover almost any type of damage to the appearance of an item. Given the context of the word in this policy, adjacent to the terms "wear and tear" and "deterioration," the term is meant to include that marring of appearance caused by wear and tear or deterioration resulting from the reasonable and normal use of an object over time. Even if the policy term has a more general meaning, however, the evidence here established that the damage caused by the Williamses to the building, its floors, and walls exceeded mere wear and tear or deterioration, and that any damage to the appearance of the dwelling or its fixtures went beyond "marring" to more sustained damage.
there was no evidence that the painting cost of $2,600 . . . was required due to the Williams occupancy. Joel Napolitano testified that the paint appeared to be old and he did not see any evidence of physical damage to the walls in the living area.
Def.s' Post-Trial Brief, at p. 29.) The testimonial and exhibit evidence, however, sustained Ms. Ehsan's claim that the Williamses damaged the walls and that repainting was necessary. The evidence here did not establish that any of the damage caused by the Williamses was in the nature of "wear and tear, marring, or deterioration." Thus, defendants did not establish this special defense by the requisite burden of proof (but even if plaintiff had the burden of proving that none of the damage was excluded by this provision, she would still prevail on this special defense, for the evidence shows that none of the damage awarded here by the court was in the nature of "wear and tear, marring, or deterioration.")
IV — CONCLUSION
For the above-stated reasons, the court finds in favor of the plaintiff and against the defendant Cambridge Mutual Insurance Company on the first count of the supplemental revised amended complaint (for breach of contract); for plaintiff and against defendants on the defendants' first through fifth special defenses addressed to that count; for plaintiff and against defendants on the sixth special defense; and for defendants and against plaintiff on the second count (breach of implied covenant of good faith and fair dealing by defendant Cambridge Mutual), third count (negligent misrepresentation by defendant Ericson Agency), fourth count (waiver of policy exclusions), and fifth count (negligence by defendant Ericson Agency) of that complaint. Judgment shall accordingly enter for plaintiff and against defendant Cambridge Mutual Insurance Company on the first count of the complaint and against plaintiff on the remaining counts.
The court awards plaintiff damages against defendant Cambridge Mutual Insurance Company on the first count of the supplemental revised amended complaint in the amount of $32,674.70. Statutory costs may be taxed by the clerk.
BY THE COURT
STEPHEN F. FRAZZINI JUDGE OF THE SUPERIOR COURT