Fowler v. Allstate Prop. Cas. Ins. Co.

Full title: KAREN FOWLER v. ALLSTATE PROPERTY CASUALTY INSURANCE COMPANY

Court: Connecticut Superior Court Judicial District of Fairfield at Bridgeport

Date published: Jan 7, 2009

2009 Ct. Sup. 1014 (Conn. Super. Ct. 2009)

Opinion

No. CV08 5016911 S

January 7, 2009

MEMORANDUM OF DECISION

BELLIS, J.

FACTS

On August 25, 2008, the plaintiff, Karen Fowler, filed a four-count substitute complaint against the defendant, Allstate Property and Casualty Insurance Company. The complaint alleges the following. On or about July 3, 2005, the defendant issued a motor vehicle insurance policy to the plaintiff which contract provided, inter alia, underinsured motorist coverage. On September 19, 2005, the plaintiff was driving her Jeep Grand Cherokee on Interstate 95. Another driver, David Forte, was operating a motor vehicle directly behind the plaintiff Forte drove his vehicle into the rear end of the plaintiff's Jeep, causing the plaintiff injuries.¹ On December 26, 2006, the plaintiff notified the defendant she would be proceeding with an underinsured motorist claim. Thereafter, the plaintiff made a reasonable settlement demand to the defendant. The defendant responded by making a final offer that was unreasonable and unfair and was rejected by the plaintiff.

1 On October 30, 2007, the plaintiff and Forte stipulated to a judgment for the sum of $20,000 before the Superior Court for the Judicial District of Fairfield. This amount exhausted the coverage provided for in Forte's insurance policy.

The plaintiff's first count alleges breach of contract. The second count alleges breach of the implied covenant of good faith and fair dealing. The third count claims a violation of subsection (6) of the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a-816, and the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110 et seq. The fourth count claims that the defendant engaged in reckless and malicious conduct in violation of CUIPA.

On September 10, 2008, the defendant filed a motion to strike counts two, three, and four of the substitute complaint on the grounds that the plaintiff has not alleged any facts that support a claim of bad faith, that CUIPA does not provide a private cause of action, and that the plaintiff has not sufficiently alleged that the defendant's actions demonstrate a general business practice as required by CUTPA. The defendant filed a memorandum of law in support of its motion to strike. On October 23, 2008, the plaintiff filed an objection to the motion to strike. The matter was on the Short Calendar on November 24, 2008.

DISCUSSION

"A motion to strike challenges the legal sufficiency of a pleading . . . and, consequently, requires no factual findings by the trial court . . . [I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Batte-Holmgren v. Commissioner of Public Health, 281 Conn. 277, 294, 914 A.2d 996 (2007). "[F]or the purpose of a motion to strike, the moving party admits all facts well pleaded." RK Constructors, Inc. v. Fusco Corp., 231 Conn. 381, 383 n. 2, 650 A.2d 153 (1994). "The role of the trial court [is] to examine the [complaint], construed in favor of the [plaintiff], to determine whether the [pleading party has] stated a legally sufficient cause of action." (Internal quotation marks omitted.) Dodd v. Middlesex Mutual Assurance Co., 242 Conn 375, 378, 698 A.2d 859 (1997). "A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003).

The defendant argues in its memorandum of law that "the plaintiff's claim for breach of the implied duty of good faith and fair dealing does not sufficiently state a dishonest purpose, evil motive or malice." The defendant further argues that the third count has failed to sufficiently demonstrate that the defendant's actions amounted to "a general business practice as required by CUTPA and the plaintiff has failed to allege fraudulent behavior accompanying the breach or aggravating circumstances." Lastly, the defendant argues that the fourth count has failed to sufficiently demonstrate that "any alleged unfair settlement practice has been committed or performed by [the defendant] with such frequency as to indicate a general business practice prohibited by [CUTPA]."² Relying solely on Practice book § 10-1, the plaintiff responds in her objection that the counts of the complaint "sufficiently [state] proper allegations upon which the plaintiff frames her claims and provides the defendant with sufficient information upon which to formulate a defense thereto. If the defendant requires further information regarding said claims, the proper procedure would be

2 The defendant also moves to strike on the ground that CUIPA does not provide a private cause of action. The defendant's memorandum of law does not address this issue. "Whether CUIPA allows a private cause of action independent of CUTPA remains an open question." HL Chevrolet, Inc. v. Berkley Ins. Co., 110 Conn.App. 428, 441 n. 7, 955 A.2d 565 (2008). In any event, the court need not address this ground because the defendant's motion to strike is granted based on legal insufficiency, as set forth above.

to file a request to devise (sic). The claims presented in the motion to strike would require pleading the evidence and not the material facts upon which the plaintiff rests her case."

Count two — Breach of the implied covenant of good faith and fair dealing

The plaintiff alleges in count two that the defendant's refusal to pay a fair and reasonable amount in satisfaction of the plaintiff's underinsured motorist claim, is a breach of the implied covenant of good faith and fair dealing. "[I]t is axiomatic that the . . . duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship . . . In other words, every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement . . . The covenant of good faith and fair dealing presupposes that the terms and purpose of the contract are agreed upon by the parties and that what is in dispute is a party's discretionary application or interpretation of a contract term . . . To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith." (Internal quotation marks omitted.) Renaissance Management Co. v. Connecticut Housing Finance Authority, 281 Conn. 227, 240, 915 A.2d 290 (2007).

"Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive . . . Bad faith means more than mere negligence; it involves a dishonest purpose." (Internal quotation marks omitted.) De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424, 433, 849 A.2d 382 (2004). "[B]ad faith is defined as the opposite of good faith, generally implying a design to mislead or to deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation not prompted by an honest mistake as to one's rights or duties . . . [B]ad faith is not simply bad judgment or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity . . . [I]t contemplates a state of mind affirmatively operating with furtive design or ill will." (Internal quotation marks omitted.) Hutchinson v. Farm Family Casualty Ins. Co., 273 Conn. 33, 42 n. 4, 867 A.2d 1 (2005). "Neglect or refusal to fulfill a contractual obligation can be bad faith only if prompted by an interested or sinister motive." Feinberg v. Berglewicz, 32 Conn.App. 857, 862, 632 A.2d 709 (1993).

Recently, in Chapman v. Georgine Realty, Superior Court, judicial district of New Haven at New Haven, Docket No. CV 05 5001346 (August 29, 2008, Bellis, J.), this court noted that "there is a split of authority among [the decisions of the] Superior [Court] as to what factual allegations are sufficient to constitute the element of bad faith . . . The first line of cases [require] specific allegations establishing a dishonest purpose or malice." (Citation omitted; internal quotation marks omitted.) "[A]mong those cases that do not require specific claims of malice or dishonesty, the courts generally require allegations that the conduct at issue was engaged in knowingly or willfully." (Internal quotation marks omitted.) Id. In Chapman, "nothing in [the plaintiff's] complaint specifically reference[d] a dishonest purpose or malice on the part of [the defendant] . . . [Furthermore] rather than claiming that [the defendant's] failure to provide liability insurance was knowing or willful, [the plaintiff] merely allege[d] that Allstate acted `unreasonably.' As such, even under the more lenient standard, [the plaintiff] fail[ed] to state a cause of action for breach of the implied covenant of good faith and fair dealing." Id.

In the present case, the plaintiff alleges that "[t]he Defendant, by refusing to pay a fair and reasonable amount to the Plaintiff in satisfaction of her underinsured motorist claim, has breached an implied covenant of good faith and fair dealing . . ." The plaintiff makes no specific factual allegations establishing a dishonest purpose, nor does the plaintiff allege that the conduct at issue was engaged in knowingly or willfully. Therefore, the defendant's motion to strike count two is granted.

Count three — Violation of CUIPA and CUTPA

The plaintiff alleges in count three that the defendant's refusal to pay a fair and reasonable amount in satisfaction of the plaintiff's underinsured motorist claim violates subsection (6) of § 38a-816, and furthermore, "[t]he foregoing constitutes a violation of . . . § 42-110a, et seq . . ." An unfair settlement claim under § 38a-816(6) of CUIPA "requires proof that the unfair settlement practices were committed or performed with such frequency as to indicate a general business practice." (Internal quotation marks omitted.) Lees v. Middlesex Ins. Co., 229 Conn. 842, 847-48, 643 A.2d 1282 (1994). "In requiring [such] proof . . . the legislature has manifested a clear intent to exempt from coverage under CUIPA isolated instances of insurer misconduct . . . [Therefore] alleged improper conduct in the handling of a single insurance claim, without any evidence of misconduct by the defendant in the processing of any other claim, does not rise to the level of a general business practice as required by [CUIPA]." (Citation omitted; internal quotation marks omitted.) Id., 849.

With respect to the plaintiff's claim that the defendant's refusal to settle constitutes a violation of § 42-110 et seq., "a CUTPA claim based on an alleged unfair claim settlement practice prohibited by § 38a-816(6) require[s] proof, as under CUIPA, that the unfair settlement practice ha[s] been committed or performed by the defendant with such frequency as to indicate a general business practice." (Internal quotation marks omitted.) Lees v. Middlesex Ins. Co., supra, 229 Conn. 850. This is because "a CUTPA claim must be consistent with the regulatory principles established by the underlying statutes." Mead v. Burns, 199 Conn. 651, 665, 509 A.2d 11 (1986). Therefore, "a CUTPA claim based on the public policy embodied in CUIPA must be consistent with the regulatory principles established therein . . ." Lees v. Middlesex Ins. Co., supra, 850. In Lees, for example, "the plaintiff [had] not alleged unfair settlement practices by the defendant in its handling of any other insurance claim . . ." Id., 848. Therein, our Supreme Court held that "[b]ecause the plaintiff's evidence was insufficient to satisfy the requirement under CUIPA that the defendant's alleged unfair claim settlement practices constituted a general business practice, the plaintiff's CUTPA claim could not survive the failure of her CUIPA claim."³ (Internal quotation marks omitted.) Id., 851.

3 In general, CUTPA claims do not require proof of multiple acts of misconduct. According to our Appellate Court, a CUTPA claim requires proof of multiple acts in "the specific situation in which a plaintiff has alleged violations of CUTPA and the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a-815 et seq., against an insurer on the basis of conduct that constitutes an unfair claim settlement practice as defined in General Statutes § 38a-816(6)." (Emphasis in original.) Hart v. Carruthers, 77 Conn.App. 610, 618 n. 5, 823 A.2d 1284 (2003). Moreover, "CUTPA has been held to apply to a single act of misconduct." Johnson Electric Co. v. Salce Contracting Associates, Inc., 72 Conn.App. 342, 351, 805 A.2d 735, cert. denied, 262 Conn. 922, 812 A.2d 864 (2002). Therefore, where a CUTPA claim is not against an insurer on the basis of conduct that constitutes an unfair claim settlement, a single act of misconduct may create a cause of action in CUTPA.

In the present case, the only allegation made by the plaintiff to support a CUIPA/CUTPA violation is one paragraph in the plaintiff's substitute complaint which alleges that "[t]he defendant's unfair conduct was committed with such frequency as to amount to a general business practice." Aside from her sole conclusory statement, the plaintiff's claim is not supported by any allegations that the defendant engaged in unfair settlement practices with enough frequency to constitute a general business practice. The plaintiff never alleges that the defendant has failed to settle similar claims presented by other claimants. Therefore, the defendant's motion to strike count three is granted.

Count four — Reckless and Malicious Conduct

The plaintiff alleges in count four that "[t]he Defendant has willfully engaged in a consertive (sic) form of conduct in failing [to] pay a reasonable and adequate amount in satisfaction of Plaintiff's claim and has engaged in a general course of reckless business conduct in violation of CUIPA." As previously stated, the "alleged improper conduct in the handling of a single insurance claim, without any evidence of misconduct by the defendant in the processing of any other claim, does not rise to the level of a `general business practice' as required by [CUIPA]." Lees v. Middlesex Ins. Co., supra, 229 Conn. 849. In the present case, because the plaintiff has not alleged that the defendant has failed to settle similar claims presented by other claimants, her allegations do not rise to the level of a general business practice as prohibited by § 38a-816(6) of CUIPA.⁴ Therefore, the defendant's motion to strike count two is granted.

4 It appears that the plaintiff's reference to "concertive" conduct is meant to refer to "concerted" conduct; i.e., conduct mutually contrived and performed in uniform. Regardless, such allegation is conclusive and unsupported by sufficient facts.

Conclusion

For the foregoing reasons, the defendant's motion to strike counts two, three, and four is granted.