Opinion
No. CV00 0439407
February 8, 2001
Memorandum of Decision re Motion to Strike
The defendant Ryan Associates, LLC (Ryan) has filed a motion to strike the sixth and eighth counts of the plaintiff's complaint. The sixth count is a cause of action asserted by the plaintiff against Ryan Associates, LLC under the Connecticut Unfair Insurance Practices Act (CUIPA). The eighth count is a cause of action asserted by the plaintiff against Ryan under the Connecticut Unfair Trade Practices Act (CUTPA). The defendant seeks to strike the sixth count asserting that CUIPA does not provide for a private cause of action. The defendant seeks to strike the eighth count asserting that no CUTPA claim may lie where the CUIPA claim fails.
The plaintiff, at all relevant times was the owner of property at 7179 Knowlton Street in Bridgeport, Connecticut. Ryan is alleged to have submitted a proposal to provide various business lines insurance for the plaintiff which was to include the 7179 Knowlton Street, Bridgeport property. Ryan stated to plaintiff that the insurance to be provided through the defendant Providence Washington Insurance Company (Providence) would include replacement cost coverage for that property. A fire occurred at 7179 Knowlton Street on June 4, 1998. The plaintiff, which had its place of business at that address, suffered losses from the fire. Plaintiff has alleged that the insurance coverage with Providence, in fact, was not replacement cost coverage and plaintiff was thus harmed.
I. The Legal Standard
A motion to strike challenges the legal sufficiency of the allegations of any complaint, or any one or more counts thereof, to state a claim upon which relief can be granted. Practice Book Section 10-39. A motion to strike admits all facts well pleaded. Ferryman v. Groton, 212 Conn. 138, 142 (1989). In ruling upon a motion to strike, the court may consider only those grounds raised in the motion. Blancata v. Feldspar, 203 Conn. 34, 44 (1987). The court is limited to the facts alleged in the pleading which is the subject of the motion to strike. Gordon v. Bridgeport Housing Authority, 208 Conn. 161, 170 (1988). The court must view the facts alleged in the pleading in the light most favorable to the pleader. Ferryman, 212 Conn. at 146.
II. Count Six — The CUIPA Violation
In the sixth count of its complaint, the plaintiff claims that the defendant Ryan violated General Statutes § 38a-816 (1), (2), (6) and (8). The defendant Ryan's motion to strike addresses only the discrete issue of whether a private cause of action exists in the provisions of General Statutes §§ 38a-315 and 38a-316. The defendant Ryan has filed a memorandum in support of its motion to strike, and, similarly, the plaintiff has filed a memorandum in opposition to the motion to strike. Both parties acknowledge that there is, in the absence of a definitive ruling on this issue from the Appellate or Supreme Court, a split of authority exists among the trial court judges. Each, of course, urges this court to conclude that the Superior Court decisions supporting their respective perspectives represent the more persuasive voice for the court ruling on the instant motion.
Sec. 38a-816 (1) Misrepresentations and false advertising of insurance policies. Making, issuing or circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement, sales presentation, omission or comparison which: (a) Misrepresents the benefits, advantages, conditions or terms of any insurance policy; (b) misrepresents the dividends or share of the surplus to be received, on any insurance policy; (c) makes any false or misleading statements as to the dividends or share of surplus previously paid on any insurance policy; (d) is misleading or is a misrepresentation as to the financial condition of any person, or as to the legal reserve system upon which any life insurer operates; (e) uses any name or title of any insurance policy or class of insurance policies misrepresenting the true nature thereof; (f) is a misrepresentation for the purpose of inducing or tending to induce to the lapse, forfeiture, exchange, conversion or surrender of any insurance policy; (g) is a misrepresentation for the purpose of effecting a pledge or assignment of or effecting a loan against any insurance policy; or (h) misrepresents any insurance policy as being shares of insurance business, which is untrue, deceptive or misleading; (2) False information and advertising generally. Making, publishing, disseminating, circulating or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, an advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading. . . . (6) Unfair claim settlement practices. Committing or performing with such frequency as to indicate a general business practice any of the following: (a) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue; (b) failing to acknowledge and act with reasonable promptness upon communications with respect to claims arising under insurance policies; (c) failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies; (d) refusing to pay claims without conducting a reasonable investigation based upon all available information; (e) failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; (f) not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear; (g) compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds; (h) attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application; (i) attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of the insured; (j) making claims payments to insureds or beneficiaries not accompanied by statements setting forth the coverage under which the payments are being made; (k) making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration; (l) delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information; (in) failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage; (n) failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement; (o) using as a basis for cash settlement with a first party automobile insurance claimant an amount which is less than the amount which the insurer would pay if repairs were made unless such amount is agreed to by the insured or provided for by the insurance policy. . . . (8) Misrepresentation in insurance applications. Making false or fraudulent statements or representations on or relative to an application for an insurance policy for the purpose of obtaining a fee, commission, money or other benefit from any insurer, producer or individual.
In Mead v. Burns, 199 Conn. 651, 657 (1986), the Supreme Court expressly declined to consider whether a private cause of action lies under CUIPA. It did so while disposing of the case on other grounds which involved the adequacy of the private CUIPA cause of action raised by the plaintiff in that matter. Similarly, in Lees v. Middlesex Ins. Co., 229 Conn. 842, 851 (1987) fn4, the Court states: "The defendant raises alternate grounds for affirmance of the trial court's summary judgment on both the CUIPA and CUTPA claims. With respect to the CUIPA count, the defendant contends that CUIPA does not create a private cause of action. We decline to consider that claim because it is unnecessary for us to do so. See Mead v. Burns, 199 Conn. 651, 657 n. 5, 509 A.2d 11 (1986); Griswold v. Union Labor Life Ins. Co., 186 Conn. 507, 521 n. 12, 442 A.2d 920 (1982)."
"When a legislative provision protects a class of persons by proscribing or requiring certain conduct but does not provide a civil remedy for the violation, the court may, if it is determined the remedy is appropriate in furtherance of the purpose of the legislation and needed to assure the effectiveness of the provision, accord to an injured member of the class a right of action, using a suitable existing tort action or a new cause of action analogous to an existing tort action." Restatement of Law Torts 2d § 874A. This court is persuaded that CUIPA allows a private right of action. The language of 38a-915 provides a blanket prohibition from any person conducting an unfair insurance practice as defined by statute. Assuming the facts as pled, that the defendant violated the provisions of this section, without allowing the instant action, no civil remedy would exist for the plaintiff. The statute authorizes the insurance commissioner to examine the business affairs of those engaged in insurance business to determine whether any such unfair practices are occurring. Further, the insurance commissioner is granted authority to hold hearings, issue subpoenas, and issue orders of findings of violation which can result in both a financial penalty as well as a loss of license to engage in the insurance business. 38a-817. The specific prohibited conduct which constitutes an unfair insurance practice is clearly placed in 38a-816. While the actions of the insurance commissioner will go far in protecting all members of the public who may be injured prospectively by unfair insurance practices, only a private cause of action will protect the plaintiff from a specific instance of an unfair insurance practice (assuming it otherwise meets the legal standard).
III. Count Eight — The CUTPA Violation CT Page 2147
The defendant Ryan seeks to strike the eighth count of the plaintiff's complaint, arguing that if there is no cause of action under CUIPA, there can be no cause of action under CUTPA. The defendant relies on Lees v. Middlesex, 229 Conn. at 850: ". . . a CUTPA claim based on the public policy embodied in CUIPA must be consistent with the regulatory principles established therein." Defendant Ryan argues, then, that if the court strikes the CUIPA claim it must strike the CUTPA claim. No other ground is asserted. The court, not having struck the CUIPA claim, therefore declines to strike the CUTPA claim.
The motion to strike is denied.
By the Court,
MUNRO, J., J.