Opinion
FSTCV186039230S
12-05-2019
Daniel E. Kahn v. Mary Williams Insurance Agency, LLC
UNPUBLISHED OPINION
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Genuario, Robert L., J.
MEMORANDUM OF DECISION RE DEFENDANT’S MOTION TO STRIKE (DOCKET #104.00) AND DEFENDANT’S OBJECTION THERETO (DOCKET #106.00)
GENUARIO, J.
I. INTRODUCTION
The plaintiff brings this action in five counts against the defendant whom the plaintiff alleges provided him with a certificate of insurance. After an accident involving two workers on the plaintiff’s property, the plaintiff was informed by the insurance carrier that the subject insurance policy did not cover the plaintiff for claims made by the workers as the result of the exclusions in the policy for certain types of risks. The plaintiff brings this action against the insurance broker essentially alleging that the certificate provided to him by the broker misled him into thinking that he had adequate coverage.
The plaintiff’s complaint sounds in five counts: (1) negligence, (2) negligent misrepresentation, (3) violation of Connecticut General Statute § 38a-322a (dealing with duties of insurance brokers), (4) breach of the implied covenant of good faith and (5) violation of the Connecticut Unfair Trade Practices Act by virtue of the defendant’s breach of its duties under the Connecticut Unfair Insurance Practices Act.
The defendant has moved to strike all five counts claiming that no count sets forth a cause of action recognized under Connecticut Law. The court will not repeat the well known standards governing a motion to strike.
II. THE COMPLAINT
In his complaint, the plaintiff asserts the following allegations. The plaintiff who owns property in Connecticut sought to enter into an agreement for certain renovation and reconstruction work at his home with non-party Master Services Home Improvement, LLC (Master Services). The work to be performed by Master Services included roofing work. The plaintiff’s bank required evidence of insurance as a condition of the loan which the plaintiff was utilizing to finance the construction project and, accordingly, the plaintiff required Master Services to provide him with proof of insurance coverage for the work described in the contract. Master Services then provided through the defendant a certificate of insurance issued by the defendant. The Certificate included a provision indicating that the plaintiff was an additional insured on an insurance policy under the Master Service’s insurance policy. The certificate of insurance described the operations as "repairing wood shingles on main roof." In reliance on those representations the plaintiff entered into an agreement with Master Services to remodel his home. During the course of the project two workers fell from the roof. One was pronounced dead at the scene and the other survived but suffered serious bodily injuries. The plaintiff notified the carrier who declined the coverage based on exclusion for claims contained in the policy arising out of work at heights. The carrier declined to provide coverage based on two exclusions in the policy. "(1) For bodily injury sustained by any person, whether working or not resulting from a fall from heights; (2) for injuries suffered by employees, contractors or subcontractors of the insured." The plaintiff continues that at all relevant times the defendant represented, warranted and stated that it was an authorized agent/broker of the carrier, that it would obtain appropriate necessary insurance policies and/or coverage for the plaintiff and the defendant knew or should have known that the plaintiff required insurance policies and/or coverage that provided coverage from potential claims arising out of the remodeling work being done at its property by Master Services. The plaintiff further states that the defendant represented, warranted, agreed and stated that it would obtain full, complete and adequate insurance coverage for the plaintiff.
III. DISCUSSION
A. First Count- Negligence
In addition to the above factual allegations, the plaintiff’s first count sounding in negligence alleges that the plaintiff’s damages were proximately caused by the negligence of the defendant by failing to properly obtain the necessary and adequate insurance coverage, by misrepresenting that it had obtained the insurance policy and coverage that would protect the plaintiff, by representing the nature and the extent of the insurance policies, by failing to insure the insurance policies it obtained would apply to the property in the event of the claims or losses arising from the work. The defendant moves to strike the first count on the grounds that the plaintiff has failed to allege that the defendant owed a duty to the plaintiff.
It is of course black letter law that the elements of the cause of action negligence are 1) a duty, 2) a breach of that duty, 3) causation and 4) actual injury. Murdock v. Croughwell, 268 Conn. 559, 566 (2004). The defendant correctly asserts that an insurance broker "owes a duty to his principal." The defendant claims that as Master Services’ broker it owed a duty to Master Services but not to a third party with whom Master Services contracted. While the defendant may in the first instance owe a certain duty to its principal, and there is no allegation indicating that the plaintiff was a principal of the defendant’s insurance broker, it is not a natural corollary of that concept that an insurance broker owes no duty to anyone else.
[T]he existence of a legal duty of care entails (1) a determination of whether an ordinary person in the defendant’s position knowing what the defendant knew or should have known, would anticipate that harm of the general nature of that suffered was likely to result, and (2) determination, on the basis of public policy analysis, of whether the defendant’s responsibility for its negligent conduct should extend to the particular consequences or particular plaintiff in the case ... The first part of the test invokes the question of foreseeability and the second part invokes the question of policy.Murillo v. Seymour Ambulance Association, Inc., 264 Conn. 474, 479 (2003) quoting Gazo v Stamford, 255 Conn. 245, 250 (2001) (internal quotation marks omitted.)
In the instant case reading the allegations of the complaint, in the manner most favorable to the pleader, it is difficult to say that the harm caused to the plaintiff was not foreseeable. The plaintiff sought coverage to protect himself against claims arising out of the construction project which expressly included work roof. The defendant prepared a document naming the plaintiff as an additional insured and describing the operation for which the certificate was being issued as roof work. Such facts brings the plaintiff within the scope of people who could be foreseeably injured by negligence of the broker in describing the policy or coverages that were in effect. Thus, in the absence in public policy factors which dictate to the contrary, such foreseeability of injury may create a duty on the part of the defendant to act in a reasonable manner. The defendant argues the certificate itself contains express provisions referencing the subject policy and making any coverage subject to the exclusions and limitations contained in the policy. However, that argument goes to the issue of fact as to whether or not the defendant breached its duty when it provided a certificate of insurance which made certain statements about the coverage and certain statements about exclusions. The duty exists by virtue of the foreseeability of injury to the additional insured; whether the defendant breached that duty is a question of fact not appropriate for determination on a motion to strike.
In measuring the public policy factors and in determining the extent of any legal duty the court must consider the following four factors:
(1) the normal expectations of the participants in the activity under review; (2) the public policy of encouraging participation in the activity while weighing the safety of the participants; (3) the avoidance of increased litigation; (4) the decisions of other jurisdictions.Murillo, supra, citing Perodeau v. Hartford, 259 Conn. 729, 756, 57 (2002).
In the instant case the court must conclude that the normal expectations of one who seeks to be added as an additional insured on an existing policy would be that the broker issuing the certificate evidencing the policy would have some duty to use reasonable care in the preparation of that certificate. The use of insurance certificates evidencing a certain level of coverage by those who should have expertise in the area for the protection of those who need insurance is a policy to be encouraged. The policy presumes that the persons who are licensed by the State of Connecticut to issue such certificates would conduct themselves in a manner consistent with a reasonable level of care. Such a legal duty might cause an increase in litigation but that is only one factor for the court to consider. Other jurisdictions have recognized that a broker under certain circumstances can have a duty to specifically identifiable persons. See e.g. Emahiser v. Complete Coverage Insurance, LLP, 53 F.Sup.3 rel 1025, 1030-31 (N.D. Ohio 2014); Johnson v. Smith, 58 N.C.App. 390 (1982).
For all these reasons the court must deny the motion to strike the first count. See also Estavien v. Progressive Casualty Insurance Co., 2019 WL 2005995 (April 8, 2019) .
B. Second Count- Negligent Misrepresentation
In moving to strike the second count the defendant relies on Nazami v. Patrons Mutual Insurance Company, 280 Conn. 619 (2006) but the court does not believe that Nazami is’ controlling. "Even if we assume some contractual relationship was created by issuances of the certificate that would have given rise to duty [to inform the plaintiff in the event that the insurance was cancelled] the certificate clearly disclaims any duty to [so] inform the plaintiff." Consistent with Nazami, this court acknowledges that the certificate does not create a contract between the broker and, the additional insured. However, a common-law duty of care can arise from the circumstances and relationship between the defendant and the plaintiff giving rise to a foreseeable injury in the event the defendant fails to exercise reasonable care.
In Nazami the court noted the particular claim being made by the plaintiff therein was that the defendant owed the plaintiff a duty to notify the plaintiff in the event the insured’s policy was cancelled. The Nazami court observed that obligation and liability for failure to so notify was expressly excluded in the certificate. In the case at bar, however, the defendant affirmatively stated that the carrier was providing insurance for the operations of repairing wood shingles on main roof. There was nothing in the certificate that expressly excluded or limited that statement to put the plaintiff on notice of a limitation. In the instant case the certificate contains an affirmative representation concerning the risks that are insured against, while in Nazami the certificate contained express language exculpating the defendant from the failure to notify the plaintiff of the cancellation. As in any negligence case the specific facts are important including the particular language in the certificate. The language relied upon by the plaintiff herein is significantly different and distinguishes this case from Nazami. The court acknowledges that the certificate in the present case contains language referencing in general the terms and limitations of the policy itself but whether this more generalized language is sufficient to insulate the defendant from liability cannot be decided as a matter of law.
Accordingly, the motion to strike the second count must also be denied.
B. Third Count- Breach of Obligations under C.G.S. Section 38a-322a
In the third count the plaintiff alleges that the defendant has violated certain provisions of Connecticut General Statute § 38a-322a which prohibits the issuance of a certificate of insurance that contains false or misleading information about the coverage provided by a referenced insurance policy. The defendants move to strike this count on the grounds that 38a-322a does not create a private cause of action. The court agrees. 38a-322a(f) specifically provides that the Commissioner of Insurance may conduct an investigation if the Commissioner reasonably believes a person has violated the provisions of this section. C.G.S. § 38a-16 provides the State Insurance Commissioner with the ability to conduct investigations.
The plaintiff concedes that there is a presumption that a statute does not create a private right of action unless explicitly stated. Frankly, there is nothing in the statute which leads the court to believe that there was an intent to create a private cause of action. The insurance industry is heavily regulated within the State of Connecticut and multiple duties are rightfully imposed upon it and those who practice within the industry. However, the regulatory scheme created by the Connecticut General Statutes sets forth powers of the Insurance Commissioner to enforce those regulatory schemes and there is nothing in that statutory scheme which persuades the court that legislature intended to create a private cause of action. The language would appear to be exactly the contrary. Moreover the plaintiff has cited no Connecticut case in which such a private cause of action has been recognized. For all these reasons the court must strike the third count of the plaintiff’s complaint.
Accordingly, the motion to strike the third count must be granted.
C. Fourth Count- Breach of Implied Covenant of Good Faith and Fair Dealing
In the fourth count the plaintiff alleges that the defendant has breached its duty of good faith and fair dealing as an implied covenant to their contractual relationship.
While an implied covenant of good faith and fair dealing is contained in every contract it is based upon the assumption that the two parties have in fact engaged in a contractual relationship. Owen v. Georgia Pacific Corp., 389 F.Supp. Section 382, 393 (D.Conn. 2005). While the defendant may have some common-law duties to the plaintiff, which the plaintiff may prosecute under its first and second counts, the plaintiff has not alleged facts which would give rise to a contractual relationship. The certificate of insurance attached to the complaint expressly states that it "does not constitute a contract between the issuing insurer(s), authorized representative or producer, and the certificate holder." Consistent with Nazami, a certificate of insurance containing such language does not create a contractual relationship. Because there is no alleged contractual relationship, the plaintiff has not stated an essential element of a cause of action for a breach of an implied covenant of good faith and fair dealing which is necessarily based on a contractual relationship in the first instance.
Accordingly, the defendant’s motion to strike the fourth count must be granted.
D. Fifth Count- Violation of CUTPA
The defendant alleges that the plaintiff has not stated a violation of the Connecticut Unfair Trade Practice Act essentially because it has not alleged that the defendant has made a misrepresentation which is the basis upon which the plaintiff’s cause of action under CUTPA rests. However, as this court explained in an early section it believes plaintiff has stated a cause of action for negligent misrepresentation and the allegations regarding that negligent misrepresentation are sufficient to support the plaintiff’s cause of action under CUTPA. Accordingly, the motion to strike the fifth count must be denied.
IV. CONCLUSION
For all these reasons the court denies the defendant’s motion to strike counts one two and five; the court grants the defendant’s motion to strike counts three and four.