Lemieux v. New London County Mutual Insurance Co.

Full title: David R. LEMIEUX et al. v. NEW LONDON COUNTY MUTUAL INSURANCE COMPANY

Court: Superior Court of Connecticut

Date published: Jun 24, 2019

No. CV166011231S (Conn. Super. Ct. Jun. 24, 2019)

Opinion

CV166011231S

06-24-2019

David R. LEMIEUX et al. v. NEW LONDON COUNTY MUTUAL INSURANCE COMPANY

Farley, J.

UNPUBLISHED OPINION

OPINION

Farley, J.

In this insurance dispute involving crumbling concrete basement walls at the home of the plaintiffs, David Lemieux and Alicia Lemieux, the defendant, New London County Mutual Insurance Company ("NLC"), has moved for summary judgment on all three counts of the plaintiffs’ amended complaint. The first count seeks a declaratory judgment requiring NLC to provide coverage for the damage to the plaintiffs’ home. The second count alleges breach of contract based on NLC’s denial of coverage for the damage. The third count alleges a claim under the Connecticut Unfair Trade Practices Act ("CUTPA") based on an alleged general business practice of unreasonably denying coverage for this and similar claims in violation of the Connecticut Unfair Insurance Practices Act ("CUIPA"). NLC, which provided homeowners insurance coverage to the plaintiffs from 2000 through the present, maintains that its policies in effect in 2015 and 2016 do not provide coverage for the claimed loss. Based on that, NLC asserts further that the plaintiff has no viable claim for violation of CUTPA/CUIPA.

There is a dispute between the parties in this case over the applicable policy language. The plaintiffs claim their loss constitutes a collapse under all of NLC’s policies, but the terms of NLC’s collapse coverage changed in the 2007-2008 policy year. Prior court decisions have consistently held that the collapse coverage in NLC’s earlier policies raises questions of fact concerning coverage for this type of loss, whereas the language in the later policies generally has been held to preclude coverage. The plaintiffs alternatively maintain, however, that NLC’s attempt to change the terms of the collapse coverage in the 2007-2008 policy year and succeeding policy periods was ineffective due to NLC’s failure to give the plaintiffs proper notice of the change in accordance with General Statutes § 38a-323 governing the nonrenewal of insurance policies. NLC maintains that the statute as it stood in 2007 did not require notice of a change in policy language because a change in the scope of coverage is not a "nonrenewal" under the statute. NLC further maintains that even if the statute were construed to require such notice, it still would not apply because the 2007 change in the collapse coverage was not substantive, but rather was clarifying.

The court concludes that a "nonrenewal" under § 38a-323 in its 2007 form did require sixty days’ advance notice of substantial changes in the scope of coverage and that the record in this case fails to conclusively resolve questions concerning NLC’s compliance with the statute as well as the consequences of noncompliance. Even though the court concludes below that the 2015-2016 policy is the applicable policy, the court is unable to resolve on summary judgment whether the earlier collapse coverage language must be deemed a part of that policy and, therefore, must deny NLC’s motion for summary judgment as to counts one and two.

The court is able to resolve the plaintiffs’ CUTPA/CUIPA claim on summary judgment. NLC’s denial of coverage under the terms of the 2015-2016 policy was reasonable as a matter of law and the plaintiffs’ CUTPA/CUIPA claim is not based on NLC’s failure to comply with § 38a-323. Even if it were, there is insufficient evidence that NLC’s conduct was part of a general business practice as required by CUIPA to establish an unfair claims settlement practice.

The court therefore denies NLC’s motion for summary judgment on counts one and two, but grants the motion as to count three.

FACTS

The plaintiffs’ home in Vernon, Connecticut was built in 1985, and purchased by the plaintiffs in 1999. A home inspection conducted at the time of their purchase revealed the presence of some settlement cracks in the concrete basement walls that were considered "normal" by the home inspector and also revealed some evidence of repairs taken to deal with water entering the basement. Years later the plaintiffs observed changes in the cracks, beginning in September 2015, when they had some plumbing work done. On the plumber’s recommendation and based on their own concerns, in December 2015, the plaintiffs had their basement inspected by a local contractor, who advised them they had a problem with the concrete in their basement walls that would require the complete removal and replacement of the walls. The plaintiffs sought a second opinion from an engineer, William Neal, who inspected the home on June 16, 2016.

Following his inspection, Mr. Neal wrote a report on June 16, 2016, setting forth his findings and conclusions. He observed that the basement walls had "numerous spider-web and horizontal cracks up to 1/2" wide." In several locations the walls were "starting to bow inward" and they showed "heavy efflorescence." The concrete chimney base and the front porch also exhibited "spider-web cracking" and there were cracks in the exterior of the basement walls approximately 1/2" wide. In Mr. Neal’s opinion "incompatible materials used in the concrete mix" are producing a chemical reaction within the concrete causing the damage. He opined following his inspection that the house was "structurally unsound" and that the chemical reaction would continue to deteriorate the concrete and the "walls will very likely bulge inward until they structurally fail." He recommended that the basement walls be replaced.¹ He did not express the view that the home was unsafe for occupancy. It is undisputed that the plaintiffs have not replaced the basement walls and they still occupy the house.

1 Mr. Neal’s opinions were substantially affirmed by another engineer, David Grandpré, who inspected the home on August 22, 2017.

After receiving Mr. Neal’s report in August 2016, the plaintiffs made a claim for coverage under their policy with NLC. NLC acknowledged the claim on August 22, 2016, and began an investigation. The plaintiffs commenced this action on September 7, 2016, before NLC completed its investigation, and sought a declaratory judgment. On October 21, 2016, NLC denied the claim and the plaintiffs subsequently amended their complaint to add the breach of contract and CUTPA/CUIPA claims.

The plaintiffs’ claim for coverage is limited to their assertion that the damage to their home is covered under the "Additional Coverage" for "Collapse" contained in all of the policies issued by NLC. NLC substantially changed the language of the collapse coverage with the policy that became effective on August 20, 2007, and there is a dispute in this case whether NLC made that change in accordance with Connecticut law. The NLC policies issued from August 20, 2000, until August 19, 2007, provided collapse coverage as follows:

8. Collapse. We insure for direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following:

a. Perils Insured Against in COVERAGE C- PERSONAL PROPERTY. These perils apply to covered buildings and personal property for loss insured by this additional coverage:

b. Hidden decay;

c. Hidden insect or vermin damage;

d. Weight of contents, equipment, animals or people;

e. Weight of rain which collects on a roof; or

f. Use of defective material or methods in construction, remodeling or renovation;

Loss to an awning, fence, patio, pavement, swimming pool, underground pipe, flue, drain, cesspool, septic tank, foundation, retaining wall, bulkhead, pier, wharf or dock is not included under items b., c., d., e., and f. unless the loss is a direct result of the collapse of a building.

Collapse does not include settling, cracking, shrinking, bulging or expansion.

* * * *

As referenced above, the policy effective August 20, 2007, changed the collapse provision. Beginning then, and through the 2015 and 2016 policies, NLC provided coverage for collapse as follows: "We insure for direct physical loss to covered property involving collapse of a building or any part of a building if such collapse was caused by ... (2) Decay that is hidden from view, unless the presence of such decay is known to an ‘insured’ prior to collapse; ... or (6) Use of defective material or methods in construction, remodeling or renovation." The policies include a definition of "collapse" with respect to this coverage as follows:

(1) Collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its current intended purpose.

(2) A building or any part of a building that is in danger of falling down or caving in is not considered to be in a state of collapse.

(3) A part of a building that is standing is not considered to be in a state of collapse even if it has separated from another part of the building.

(4) A building or any part of a building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion.

The plaintiffs argue that all of the policies issued by NLC are triggered in this case under the "continuous trigger theory" they advocate. Alternatively, the plaintiffs argue the language in all of NLC’s policies must be deemed to be that which was contained in the 2000 to 2007 policies because NLC did not properly notify the plaintiffs of the change in the collapse coverage initiated in the 2007 policy. Finally, they maintain the language in the 2007 to 2016 policies is ambiguous in any event and must be construed in favor of coverage.

In addition to the declaration of coverage they seek in count one and their breach of contract claim in count two, the plaintiffs allege NLC violated CUIPA, specifically General Statutes § 38a-816(6) covering unfair claims settlement practices, by giving a "knowingly false and misleading reason for the denial of coverage" and participating in an "industry wide practice of denying coverage for concrete decay claims as part of its general business practice." Based on that allegation the plaintiffs’ third count asserts a claim under CUTPA, defined under General Statutes § 42a-110a et seq.

THE PARTIES’ CLAIMS ON SUMMARY JUDGMENT

NLC has moved for summary judgment arguing that there is no coverage under its policy in effect in 2015-2016 and, consequently, no liability under CUTPA/CUIPA. NLC maintains that only the 2015-2016 policy is potentially triggered because the alleged loss became manifest during that period. NLC argues that the 2015-2016 policy unambiguously precludes coverage for the damage to the plaintiffs’ basement walls because there has not been an "abrupt falling down or caving in" of their home, or part of their home, the house is still standing, and it has not been rendered uninhabitable. NLC further argues that, even if there is or may be coverage, it has no liability under CUTPA/CUIPA because coverage is "fairly debatable" and there is insufficient evidence of a general business practice, as is required to establish an unfair claims settlement practice under CUIPA.

In response to NLC’s motion, the plaintiffs argue that NLC has failed to carry its burden on summary judgment for several reasons. First, they maintain NLC must negate coverage under all of their policies, not just the 2015-2016 policy. They argue that all of the policies are implicated under a "continuous trigger theory" and, further, that NLC did not succeed in changing the policy language in 2007 because it failed to comply with General Statutes § 38a-323 as interpreted by the Insurance Commissioner in a bulletin issued in 2004. The bulletin expressed the Commissioner’s view that the statute requires an insurer to send a nonrenewal notice or a "conditional renewal notice" sixty days in advance of a policy’s expiration date whenever an insurer proposes the renewal of coverage "under terms or conditions less favorable than previously provided." No such notice was provided to the plaintiffs in 2007, and the plaintiffs maintain this means the collapse coverage in the later policies must be deemed to be written as it had been in the 2006-2007 policy. Finally, the plaintiffs argue there is coverage under the 2015-2016 policy because the definition of "collapse" in that policy is ambiguous.

As to the CUTPA/CUIPA count, the plaintiffs do not contest the proposition that a lack of coverage would negate their CUTPA/CUIPA claim based on alleged unfair claims settlement practices. They dispute, however, NLC’s argument that even if coverage is "fairly debatable" a CUTPA/CUIPA claim may not lie and they argue NLC has failed to sustain its burden on summary judgment to negate the allegation of a general business practice.

The court initially heard the parties at oral argument on August 27, 2018, and requested supplemental briefing on the issues raised by the Insurance Commissioner’s bulletin. NLC filed a supplemental brief on August 31, 2018, and the plaintiffs responded on September 14, 2018. Additional briefs on the issue were filed in January and February 2019 and the court heard additional argument on February 26, 2019.

Based on the written submissions and the arguments of the parties, the court concludes that: only the 2015-2016 policy is triggered by the plaintiffs’ claim; the collapse coverage in that policy is not ambiguous as applied to the facts of this case; and the abrupt collapse provision would preclude coverage for the plaintiffs’ claim. The court concludes further, however, that § 38a-323 required NLC to provide sixty days’ advance notice of substantial changes to the scope of coverage in a proposed renewal policy and that NLC did not provide such notice regarding the proposed changes to the collapse coverage. There are unresolved questions regarding NLC’s compliance with the statute and whether the change in the scope of coverage initiated in 2007 was effective as to the 2015-2016 policy. If not, the earlier policy language applies and, consistent with this court’s prior decisions, questions of fact concerning the applicability of that coverage preclude summary judgment for NLC on counts one and two. Finally, the court concludes there are no issues of material fact related to the plaintiffs’ CUTPA/CUIPA claims and, therefore, NLC is entitled to summary judgment on that claim.

SUMMARY JUDGMENT STANDARDS

"[S]ummary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law ... In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." Stuart v. Freiberg, 316 Conn. 809, 820-21, 116 A.3d 1195 (2015). "The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law ... and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact ... A material fact ... [is] a fact which will make a difference in the result of the case." Id., 821.

"To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ... When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue ... Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue." (Internal quotation marks omitted.) Ferri v. Powell-Ferri, 317 Conn. 223, 228, 116 A.3d 297 (2015).

INSURANCE POLICY INTERPRETATION

An insurance contract is interpreted by the court according to "the same general rules that govern the construction of any written contract." Johnson v. Connecticut Ins. Guaranty Assn., 302 Conn. 639, 643, 31 A.3d 1004 (2011). Thus, "[t]he determinative question is the intent of the parties, that is, what coverage the ... [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy." Id. If the policy’s terms are "clear and unambiguous," then that language "must be accorded its natural and ordinary meaning." Id. If the terms of the insurance policy are "ambiguous," however, meaning "reasonably susceptible to more than one reading," then ambiguity "must be construed in favor of the insured because the insurance company drafted the policy." Id. "The court must conclude that the language should be construed in favor of the insured unless it has ‘a high degree of certainty’ that the policy language clearly and unambiguously excludes the claim." Liberty Mutual Ins. Co. v. Lone Star Industries, Inc., 290 Conn. 767, 796, 967 A.2d 1 (2009), citing Kelly v. Figueiredo, 223 Conn. 31, 37, 610 A.2d 1296 (1992).

"In determining whether the terms of an insurance policy are clear and unambiguous, [a] court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity ... Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party’s subjective perception of the terms ... As with contracts generally, a provision in an insurance policy is ambiguous when it is reasonably susceptible to more than one reading." Lexington Ins. Co. v. Lexington Healthcare Group, 311 Conn. 29, 37-38, 84 A.3d 1167 (2014), quoting Johnson v. Connecticut Ins. Guaranty Assn., supra, 302 Conn. 643. "[T]he mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous." Liberty Mutual Ins. Co. v. Lone Star Industries, Inc., supra, 290 Conn. 796. Nevertheless, "[c]ontext is often central to the way in which policy language is applied; the same language may be found both ambiguous and unambiguous as applied to different facts ... Language in an insurance contract, therefore, must be construed in the circumstances of [a particular] case, and cannot be found to be ambiguous [or unambiguous] in the abstract ... In sum, the same policy provision may shift between clarity and ambiguity with changes in the event at hand ... and one court’s determination that the term ... was unambiguous, in the specific context of the case that was before it, is not dispositive of whether the term is clear in the context of a wholly different matter." (Citations omitted; emphasis omitted; internal quotation marks omitted.) Lexington Ins. Co. v. Lexington Healthcare Group, Inc., supra, 311 Conn. 41-42.

DISCUSSION

This court has previously addressed many of the issues raised by NLC’s motion. This court has previously held that in the case of a progressive first-party property loss, where a covered event may have resulted from hidden decay or the use of defective material or methods in construction, the applicable trigger of coverage theory is the manifestation theory as articulated in Prudential-LMI Commercial Ins. v. Superior Court, 51 Cal.3d 674, 798 P.2d 1230, 274 Cal.Rptr. 387 (1990). See Dino v. Safeco Ins. Co. of America, Superior Court, judicial district of Tolland, Docket No. CV-16-6010428-S (June 28, 2018, Farley, J.) (66 Conn.L.Rptr. 652). This court has also construed the policy language contained in both NLC’s earlier policies and its later policies. Id.; Perracchio v. Homesite Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-16-6010324-S (March 6, 2018, Farley, J.) . Under the earlier policy language, this court and many others have denied summary judgment where collapse coverage is sought for damage to basement walls associated with the deteriorating concrete problem confronting many homeowners in this region.² Under the new language, however, this court and many others have granted summary judgment to insurers defending these claims.³ In order to resolve NLC’s motion in this case, the court must determine whether there is any genuine issue of material fact concerning when the plaintiffs’ loss occurred. If the court concludes that the plaintiffs’ claim triggers the later policies, containing the "abrupt collapse" coverage, the court must resolve the parties’ dispute over whether NLC’s failure to follow the guidance in the Insurance Commissioner’s 2004 bulletin when it changed the policy language precludes its reliance on that language in this case.

2 The term "collapse" is ambiguous when it is not defined in an insurance policy, such as in the earlier NLC policies, and this court is bound by the court’s conclusion in Beach v. Middlesex Mutual Assurance Co., 205 Conn. 246, 532 A.2d 1297 (1987) where the court, finding the undefined term "collapse" ambiguous, adopted a default definition of the term to include "any substantial impairment of the structural integrity of a building." Id., 252. Whether the condition of the plaintiffs’ basement walls constitutes a substantial impairment of structural integrity is a question of fact. Dino v. Safeco Ins. Co. of America, supra, Superior Court, Docket No. CV-16-6010428-S.

3 The collapse coverage included in the later NLC policies is not applicable here because the plaintiffs’ house has not fallen down or caved in "with the result that the building or part of the building cannot be occupied for its current intended purpose." The plaintiffs have continued to occupy the house from 2015, when they reported the loss, until the present time. The basement walls may continue to deteriorate until they structurally fail, as Mr. Neal suggested, but under the definition of "collapse," a building in that condition "is not considered to be in a state of collapse." The building is still standing and the definition of "collapse" states a building that is still standing "is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion." Moreover, aside from the plaintiffs continued occupancy of the home, the coverage for collapse covers "abrupt collapse." It is undisputed that the deterioration taking place in the plaintiffs’ basement walls is a gradual, progressive process that would take many years to result in a complete falling down of the building. See Perracchio v. Homesite Ins. Co., supra, Superior Court, Docket No. CV-16-6010324-S; Fortin v. Ins. Co. of the State of Pennsylvania, Superior Court, judicial district of Tolland, Docket No. CV-17-6011987-S (April 19, 2018, Farley, J.).

I. APPLICATION OF THE MANIFESTATION TRIGGER OF COVERAGE

NLC’s policies only cover a "loss which occurs during the policy period." As this court resolved in Dino, applying a manifestation theory of coverage, a loss occurs when it becomes "known or reasonably discoverable." Dino v. Safeco Ins. Co. of America, supra, Superior Court, Docket No. CV-16-6010428-S. It is the plaintiff’s burden to establish whether a policy is triggered by a loss which has occurred during the policy period. If there is evidence from which a fact finder may infer that a particular policy is triggered under a manifestation theory, however, summary judgment on the basis of when the loss occurred is inappropriate as to that policy. Each policy is a separate contract and, under the manifestation trigger of coverage theory, only one policy is triggered by a single loss. Roy v. Covenant Ins. Co., Superior Court, judicial district of Tolland, Docket No. TTD-CV-16-6011084-S (April 27, 2018, Farley, J.)

In this case, the plaintiffs maintain there is a factual dispute between the parties as to when the plaintiffs’ loss became known or reasonably discoverable. The plaintiffs rely upon the evidence of a crack that existed at the time they purchased their home, as pointed out by the home inspector, to argue that there is a question of fact as to when a reasonable insured would have discovered the loss. The difficulty with that argument is that the plaintiffs became aware of that crack in connection with the home inspection conducted when they purchased the home. The home inspector’s report is dated July 14, 1999. The first policy issued by NLC became effective August 20, 2000. If the loss is understood to have occurred at the time they became aware of that crack, then the loss occurred before they owned the home and before they insured the home with NLC. The plaintiffs also point to evidence that the crack worsened over the course of their ownership of the house, suggesting the loss manifested at some point after they insured the home with NLC when it became big enough to trigger a reasonable policyholder’s realization that there may be a loss. The only evidence of more severe cracking, however, arises out of the plaintiffs’ observations of the cracking beginning at the time of the plumbing work commenced in September 2015, long after NLC had changed its policy language. While the plaintiffs observed then that the original crack first seen in 1999 was "bigger," there is no evidence sufficient to "enable a jury to pinpoint the date when a reasonable homeowner should have realized there was a problem that warranted placing the homeowners insurer on notice." Dino v. Safeco Ins. Co. of America, supra, Superior Court, Docket No. CV-16-6010428-S. A jury provided with this evidence could only determine when the loss was manifest by engaging in speculation and conjecture.

The plaintiffs also rely upon the testimony of their expert witness, David Grandpré, who inspected the property on August 22, 2017. Mr. Grandprétestified regarding the extent of the problem at the time of his inspection and expressed the opinion that at that time there was a substantial impairment of the structural integrity of the home. He also stated, "Based on the severity and quantity of cracking I saw at this property, it would be my opinion that they existed five to ten years in a severe condition prior to my site visit." This court has previously ruled that testimony of this type from Mr. Grandpréis scientific in nature and not sufficiently grounded in a scientific methodology to be admissible. Dino v. Safeco Ins. Co. of America, supra, Superior Court, Docket No. CV-16-6010428-S. NLC filed a motion in limine seeking the same ruling in connection with Mr. Grandpré ’s testimony in this case. In response, the plaintiffs requested a Porter hearing, as was conducted in Dino .⁴ No Porter hearing was conducted. The court notes, however, that a Porter hearing is not required in every instance where the admissibility of scientific evidence is questioned. State v. Torres, 85 Conn.App. 303, 326-27, 858 A.2d 776 (2004). It is for the court to determine, in its discretion, whether a Porter hearing is required in order to carry out the court’s gatekeeper responsibilities regarding expert, scientific testimony. The plaintiffs have not represented to the court that the methodology employed by Mr. Grandpréin this case is any different than the one underlying the opinion he proffered in Dino . A Porter hearing is not required in every case in which the same scientific opinion evidence based on the same underlying methodology is offered. See State v. Popeleski, 291 Conn. 769, 775, 970 A.2d 108 (2009) (horizontal gaze nystagmus test). The court concludes that his testimony on this point is not admissible in this case for the same reasons the court found it inadmissible in Dino .

4 See State v. Porter, 241 Conn. 57, 698 A.2d 739 (1997), cert. denied 523 U.S . 1058, 118 S.Ct. 1384, 140 L.Ed.2d 645 (1998).

Even adopting the extreme end of the timeframe posited by Mr. Grandpré, however, his testimony places the date of loss within the 2007-2008 policy period, when NLC had changed its policy language concerning collapse.⁵ Thus, even if Mr. Grandpré ’s testimony was admissible, it does not create a genuine issue of material fact in this case because even if the loss occurred within the timeframe he suggests, subject to the plaintiffs’ arguments regarding § 38a-323, the same policy language would apply.

5 That policy commenced on August 20, 2007, just over ten years prior to Mr. Grandpré ’s inspection.

The admissible evidence supports only one conclusion- the plaintiffs’ loss occurred during the 2015-2016 policy period. Consequently, the court concludes that the plaintiffs’ claim for coverage of their loss must be resolved under that policy.

II. NLC’s FAILURE TO PROVIDE ADVANCE NOTICE OF THE CHANGE IN COVERAGE

The plaintiffs argue that the change in the collapse coverage initiated by NLC in the 2007-2008 policy issued to the plaintiffs failed to take effect because NLC did not follow the guidance given by the Insurance Commissioner in a 2004 bulletin published to all insurance companies writing property and casualty insurance in Connecticut. The Insurance Commissioner issued Bulletin PC-42-04 (the "bulletin") on May 5, 2004, regarding the "cancellation and nonrenewal" of insurance policies. In particular, the bulletin addressed the use of what it characterized as "conditional renewal notices" in the context of what the legislature then required in General Statutes § 38a-323. In 2004, when the bulletin was published the statute provided in pertinent part as follows:

No insurer shall refuse to renew any policy which is subject to the requirements of sections 38a-663 to 38a-696, inclusive, unless such insurer or its agent sends, by registered or certified mail or by mail evidenced by a certificate of mailing, or delivers to the named insured, at the address shown in the policy, at least sixty days’ advance notice of its intention not to renew. The notice of intent not to renew shall state or be accompanied by a statement specifying the reason for such nonrenewal ...

General Statues § 38a-323(a).⁶ This portion of the statute remained unchanged in August 2007 when NLC initiated the revision to the collapse coverage language in the policies issued to the plaintiffs. Bulletin PC-42-04, however, stated in pertinent part as follows:

6 Subsection (b) of the statute required insurers to send their insureds a premium billing notice not less than forty-five days in advance of the policy renewal date.

D. Guidelines Regarding The Use of Conditional Renewal Notices⁷

7 The Insurance Commissioner issued additional bulletins on this subject on August 7, 2009 (Bulletin PC-42-09) and December 21, 2009 (Bulletin PC-66). There are no material differences between these bulletins as they concern the subject of conditional renewal notices.

1. If an insurer intends to continue to insure a risk, either commercial or personal, but under terms or conditions less favorable than previously provided, the insurer must notify the insured by either sending a notice of nonrenewal or a conditional renewal notice. The conditional renewal notice must clearly state or be accompanied by a clear statement that identifies terms or conditions that may be less favorable to the insured under the ensuing policy.

2. Any significant reduction of coverage requires either a notice of nonrenewal or a conditional renewal notice. Some examples where conditional renewal notices are appropriate are:

An increase in the policy’s deductible or retention.

A decrease in the limits of coverage.

A new exclusion or deletion of coverage.

3. The conditional renewal notice must comply with the advance number of days required by statute for nonrenewal of the particular type of policy. The conditional renewal notice must be sent by registered or certified mail or by mail evidenced by a United States Post Office certificate of mailing, or delivered by the insurer to the insured by the required date.

4. The Department will not consider an insurer to be in violation of the requirements of Conn. Gen. Stat. § 38a-323 if the insurer provides a conditional renewal notice that gives the insured the advance number of days required by statute for nonrenewal, together with the statement of less favorable terms or conditions.

The plaintiffs claim that NLC did not provide the notice contemplated by Bulletin PC-42-04 and NLC has produced no evidence that it did so. Moreover, the bulletin sets forth a remedy for the failure of an insurer to provide such notice:

E. Remedy For Failure To Provide The Required Notice Of Nonrenewal Or. Conditional Renewal Notice

Failure of the insurer or its agent to provide the insured with the required notice of nonrenewal or with a conditional renewal notice shall entitle the insured to a renewal of the policy for a term of not less than one year on the same terms (not including premium) as the expiring policy and the privilege of pro-rata cancellation at the lower of the current or previous year rates if exercised by the insured within sixty days from the renewal or anniversary date.

This remedy is similar to that expressly provided in § 38a-323, although the statute does not include the bulletin’s provision that the automatic renewal is to be "on the same terms (not including premium) as the expiring policy."⁸ The plaintiffs now seek the benefit of this remedy, as they construe it, such that all of NLC’s policies issued from 2007 through 2016 must be deemed to contain the collapse coverage provided in the 2000-2007 policies.

8 General Statutes § 38a-323(c) states: "Failure of the insurer or its agent to provide the insured with the required notice of nonrenewal or premium billing shall entitle the insured to: (1) Renewal of the policy for a term of not less than one year, and (2) the privilege of pro-rata cancellation at the lower of the current or previous year rates if exercised by the insured within sixty days from the renewal date or anniversary date. Renewal of a policy shall not constitute a waiver or estoppel with respect to grounds for cancellation that existed before the effective date of such renewal."

NLC does not claim that it complied with the guidance provided in Bulletin PC-42-04, but argues instead that it is not legally bound by that bulletin⁹ and further, despite the deference paid to an enforcing agency’s interpretation of a statute, the Commissioner’s interpretation of § 38a-323 as it stood in 2007, and thereafter until October 1, 2017, is incorrect.¹⁰ To impose obligations beyond those explicitly set forth in the statute, NLC argues, the Insurance Department at least had to adopt a regulation in accordance with the Uniform Administrative Procedure Act (UAPA). NLC argues that the plaintiffs are seeking the retroactive application of § 38a-323 as amended in 2017, and argues further that the change to the collapse coverage made in 2007 did not reduce coverage, but merely clarified the coverage provided in the earlier policies.

9 NLC argues that Bulletin PC-42-04 was superseded by Bulletin PC-66, but PC-66 differs in no material respect from PC-42-04 as these bulletins concern the issue before this court.

10 In 2017, the legislature amended § 38a-323 to conform in substance with the requirements of the bulletin concerning conditional nonrenewals.

The plaintiffs do not expressly argue that the amendment to § 38a-323 adopted in 2017, which codified the terms set forth in the Insurance Commissioner’s bulletins, is to be given retroactive effect. They do so implicitly, however, by maintaining that the amendment did not impose any new obligations on insurance companies. They argue that the Insurance Commissioner’s bulletins constitute a "time-tested interpretation" of § 38a-323 by the agency charged with enforcing the statute and the department’s interpretation of the statute is entitled to the court’s deference.

Bulletin PC-42-04 and its progeny are not regulations promulgated pursuant to the Uniform Administrative Procedure Act, codified in General Statutes § 4-166 et seq. The language of the bulletin, however, is susceptible to an interpretation suggesting regulatory intent. General Statutes § 4-166(16) defines "regulation" to include an "agency statement of general applicability, without regard to its designation, that implements, interprets, or prescribes law or policy ..." To the extent that the language of the bulletin purports to independently impose substantive legal obligations on insurance companies, the bulletin is not enforceable because it was not adopted pursuant to the procedures set forth in the UAPA. Breiner v. State Dental Commission, 57 Conn.App. 700, 710, 750 A.2d 1111 (2000) citing Salmon Brook Convalescent Home, Inc. v. Commission on Hospitals & Health Care, 177 Conn. 356, 362, 417 A.2d 358 (1979). Because the bulletin is not a duly promulgated regulation, the only potential source of the legal obligation advocated by the plaintiffs is § 38a-323 itself.

The proper construction of a statute is a question of law. Tuxis Ohr’s Fuel, Inc. v. Administrator, Unemployment Compensation Act, 309 Conn. 412, 421, 72 A.3d 13 (2013). "The meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered." General Statutes § 1-2z. "However, [w]hen a statute is not plain and unambiguous, we also look for interpretive guidance to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common-law principles governing the same general subject matter ... A statute is ambiguous if, when read in context, it is susceptible to more than one reasonable interpretation." (Internal quotation marks omitted.) Tuxis Ohr’s Fuel, Inc. v. Administrator, Unemployment Compensation Act, supra, 309 Conn. 422.

General Statutes § 38a-323, as it stood in 2007, when NLC changed the terms of its collapse coverage, required advance notice when an insurer "refuse[d] to renew any policy." In such circumstances the insurer was required to provide "at least sixty days’ advance notice of its intention not to renew ... specifying the reason for such nonrenewal." The legislature’s intended meaning of "renew" in this context is a determinative factor. Specifically, the question raised in this case is whether anything short of a complete discontinuance of coverage is to be treated as a "renewal," or whether a proposed continuation of coverage on substantially different terms should be considered a "nonrenewal." To take an extreme but illustrative example, if a homeowners insurer offered to continue coverage under a "renewal" policy that completely eliminated liability coverage, would that be a "renewal" or a "nonrenewal" under § 38a-323?

"Renew" in the context of a contract means "to grant or obtain an extension of: continue in force for a fresh period." Webster’s Third New International Dictionary (1993). Black’s Law Dictionary (9th Ed. 2009) defines "renew" as follows: "to begin again or continue in force the old contract." In the insurance context, the leading treatises recognize a presumption that "insurance policy renewals are on the same terms, conditions and amounts as are provided in the original policy." 3 New Appleman Insurance Law and Practice, Ch. 30, Understanding Liability Insurance, § 30.17[4] (2015). "[W]here the insurer’s offer to renew is conditioned upon acceptance by the insured of materially new and different terms, such offer amounts to a refusal to renew the existing policy of insurance and constitutes a ‘refusal to renew.’ 2 Couch on Insurance, Ch. 29, Renewal of Policy, § 29:17.¹¹ This presumption finds support in Connecticut law as well. See Chauser v. Niagara Fire Ins. Co., 123 Conn. 413, 418, 196 A. 137 (1937) (While a renewal policy was technically a new contract, "in the absence of any further communication with the insured, a finding that the original contract was continued is reasonable"); Appeal of Bormann, 81 Conn. 458, 462, 71 A. 502 (1908) ("Renewal" of a liquor license meant "granting to the same person, the same privilege granted to him the previous year, to sell in the same place"). These authorities all support the view that a substantial change in policy terms and conditions in a proposed renewal policy would require a nonrenewal notice under the statute.

11 2 Couch on Insurance, Ch. 29, Renewal of Policy, § 29:40, elaborates:

Except where there is a special agreement for different terms, the renewal of a policy continues the original stipulations, and the only change is in the time of its expiration ... The addition of new terms to a renewal policy may support the insured’s action for reformation of the policy to conform to the original terms.

* * *

Even where the renewal is regarded as a new contract, it, in no way, changes the terms and conditions of the original policy, except to continue it in force, and the provisions of the policy as originally issued control the rights of the parties, except as such rights are affected by any waiver that may have arisen in the meantime.

The legislature itself defined "renewal" or "to renew" in General Statutes § 38a-341, which governs the cancellation (not the nonrenewal) of automobile insurance policies. There the legislature arguably recognized two alternative meanings. Section 38a-341 states" ‘[r]enewal ... means the issuance and delivery by an insurer of a policy replacing at the end of the policy period a policy previously issued and delivered by the same insurer, or the issuance and delivery of a certificate or notice extending the term of the policy beyond its policy period or term." "Replacing" a policy could be understood to contemplate potential differences between an existing policy and a proposed new policy, though not necessarily so as the distinction might merely be that the former is a new contract and the latter a continuation of the old, with ramifications that do not involve a material change in policy terms and conditions. See 2 Couch on Insurance, Ch. 29, Renewal of Policy, § 29:33-§ 29:36. Even if "replacing" a policy might suggest the introduction of new terms, however, all this suggests is that the definition of "renewal" in § 38a-341, which was in place at the time § 38a-323 was enacted, arguably recognizes two alternative understandings of the term, one that is a mere extension of the original contract and one that could involve changed terms and conditions. In the cancellation statutes that use the term as defined in § 38a-341, there is no circumstance where the distinction between these alternative meanings is material to the subject matter. The distinction is material, however, in the context of § 38a-323. The definition employed by the legislature in § 38a-341 thus merely introduces some potential difficulty into the task of discerning the legislature’s intent when it comes to § 38a-323. Arguably contemplating two reasonable understandings of the term, the legislature did not specify what it meant in § 38a-323. The legislature also had other ways to express its intent that "nonrenewal" meant a cessation of coverage, which is the meaning NLC advocates. In General Statutes § 38a-325, the legislature requires employers to provide advance notice to insured employees of a "cancellation or discontinuance" of professional liability insurance coverage, a much clearer expression of that intent. (Emphasis added.)

Under Connecticut case law, a renewal insurance policy is a "separate and distinct contract." Kane v. American Ins. Co., 52 Conn.App. 497, 501, 725 A.2d 1000 (1999). While it may contain new or different terms, ¹² generally speaking, in order to renew an insurance policy with new or different terms, there must be a knowing acceptance of the new terms. American Casualty Co. of Reading, Pennsylvania v. Baker, 22 F.3d 880, 893 (9th Cir. 1994). Only the imposition of constructive knowledge upon the policyholder, despite the fact that "we know that insurance buyers rarely read all the terms of the insurance policies that they purchase" can supply that essential element to contract formation in the context of an insurance policy renewal. Vitanza v. Amica Mutual Ins. Co., 76 Conn.App. 570, 578, 820 A.2d 324 (2003). But even constructive knowledge of changed terms and conditions can only be imposed when the insured has notice of the terms of the proposed new policy before purportedly accepting them. Simply inserting those terms into a "renewal" contract does not establish the requisite knowledge on the part of an insured. Palmer v. Hartford Fire Ins. Co., 54 Conn. 488, 9 A. 248 (1887) (Insured was entitled to seek reformation of policy that did not conform to prior understanding, despite not having read the policy until after the loss). To the extent that the legislature’s use of the words "renew," "intention not to renew" and "nonrenewal" in § 38a-323 is ambiguous, it is at least a reasonable interpretation of the statute that a proposed new policy substantially changing the scope of coverage from that contained in an existing policy is a "nonrenewal" requiring advance notice to the insured. In light of the foregoing authorities, the statute does not plainly and unambiguously exclude proposed renewal policies containing substantial changes in coverage from the statute’s notice requirements applicable to "nonrenewals." Reference to extratextual evidence, therefore, is appropriate in order to more definitively discern the legislative intent.

12 § 38a-323(b)(1) itself contemplates that the premium in a renewal policy will likely be different than the prior policy and requires advance notice of the premium. This does not mean, however, that the legislature assumed the terms of coverage in a "renewal" policy would also be different, but did not require advance notice of the changes.

The court has reviewed the legislative history surrounding the initial adoption of the notice requirement in 1985. The legislative history sheds no direct light on whether the legislature contemplated that a proposed new policy with terms and conditions substantially different than the existing policy would constitute a "nonrenewal."¹³ As has previously been observed, however, the purpose of the notice requirements in the statute as originally enacted was to provide advance notice of a discontinuance of coverage or a change in premium, sufficient to allow a policyholder time to shop around for alternative coverage. Nationwide Property & Casualty Ins. Co. v. Greater New York Mutual Ins. Co., Superior Court, judicial district of New Britain, Docket No. CV-06-5002440-S (August 10, 2009, Tanzer, J.) (48 Conn.L.Rptr. 397). A reasonable corollary to this intent, however, is that the insured needs advance notice of what coverage the insurer is offering in order to evaluate the alternatives. If it is something substantially different than the coverage they already have, they need that information as much as they need the premium information. It is consistent with the legislative purpose, therefore, to conclude that the legislature understood "renewal" to involve substantially the same policy terms as those included in the existing policy. With that understanding, the insured would have the necessary information to shop for alternative coverage based solely on the premium billing notice required under § 38a-323(b).

13 The legislative history also includes amendments to the statute following the issuance of Bulletin PC-42-04 in 2006 and 2012, unrelated to the present question. In 2006, the legislature added language to address the transfer of coverage by an insurer to an affiliate of that insurer and in 2012, the legislature made a technical amendment to subsection (f) of the statute concerning surplus lines insurers.

The legislative history also does not expressly state whether the legislature perceived it was substantively modifying the statute in 2017, or merely clarifying it, when it codified the contents of the Insurance Commissioner’s bulletin. The plaintiffs argue that the 2017 legislation was merely clarifying and, therefore, retroactive in the sense that it was not changing the law. For the plaintiffs to prevail on this basis, there must be evidence of legislative intent to support it. There is a presumption that "amendments to a statute effect a change in the existing law." Waterbury Petroleum Products, Inc. v. Canaan Oil & Fuel Co., Inc., 193 Conn. 208, 232, 477 A.2d 988 (1984). "This presumption, like any other, may be rebutted by contrary evidence of the legislative intent in the particular case. An amendment which in effect construes and clarifies a prior statute must be accepted as the legislative declaration of the meaning of the original act ... Furthermore, an amendment that is intended to clarify the intent of an earlier act necessarily has retroactive effect." (Citation omitted; internal quotation marks omitted.) Bhinder v. Sun Co., 263 Conn. 358, 368-69, 819 A.2d 822 (2003). "To determine whether the legislature enacted a statutory amendment with the intent to clarify existing legislation, we look to various factors, including, but not limited to (1) the amendatory language ... (2) the declaration of intent, if any, contained in the public act ... (3) the legislative history ... and (4) the circumstances surrounding the enactment of the amendment, such as, whether it was enacted in direct response to a judicial decision that the legislature deemed incorrect ... or passed to resolve a controversy engendered by statutory ambiguity ..." (Citations omitted; internal quotation marks omitted.) Middlebury v. Department of Environmental Protection, 283 Conn. 156, 174, 927 A.2d 793 (2007).

There is no expressed intent by the legislature that the 2017 amendment should be considered clarifying. Cf. Estate of Brooks v. Commissioner of Revenue Services, 325 Conn. 705, 159 A.3d 1149 (2017). The notable feature of the amendatory language in the 2017 legislation is the fact that it closely follows the language of the bulletin.¹⁴ In the absence of an explanation for that in the legislative history, however, it is conjectural to construe this as an intention to clarify the original meaning of the statute. Further, as adopted in 2017, the concept of "conditional renewal" is given its own subsection and thus placed alongside the concept of nonrenewal, not within a subset of nonrenewal, suggesting it is something analogous but not necessarily the same as "nonrenewal" under the statute as amended. The legislative history does reflect that the legislature understood it was "codifying a department bulletin" but the proponent of the bill in the House of Representatives thought the amendment was "a very reasonable provision and something I’d like to see pass and become law ." (Emphasis added.) 60 H.R. Proc., Pt. 12, 2017 Sess., pp. 5265-66. Thus, if anything, the very limited legislative history available indicates that the legislation was changing the law, not clarifying it.¹⁵

14 By 2017, Bulletin PC-42-04 had been superseded by Bulletin PC-66 without material change as it relates to the issues before the court.

15 This conclusion, however, does not establish the inverse proposition that "conditional nonrenewals" were outside the scope of "nonrenewals" in the statute as originally enacted. It just means there is insufficient evidence in the 2017 legislative record demonstrating a legislative intent to clarify the original meaning of the statute. Moreover, the specific requirements established for conditional renewal notices in the 2017 amendment did change the law. The imposition of these requirements, previously reflected only in the bulletin, are separate and apart from the proper interpretation of "renew," "intention not to renew" and "nonrenewal" as those terms are used in the originally enacted statute.

The only other available extratextual evidence of the meaning of § 38a-323 is the Insurance Commissioner’s bulletin itself. The plaintiffs argue that the court should defer to the content of the bulletin because it reflects the interpretation of the statute by the agency charged with enforcing the statute. When a court resorts to extratextual evidence to determine the meaning of a statute it traditionally accords deference to an agency’s interpretation of a statute that has previously been subjected to judicial scrutiny or constitutes an agency’s "time-tested interpretation." Longley v. State Employees Retirement Commission, 284 Conn. 149, 163-64, 931 A.2d 890 (2007). Deference to a time-tested agency interpretation is warranted, even when the agency’s interpretation has not previously been subject to judicial review, "because a time-tested interpretation, like judicial review, provides an opportunity for aggrieved parties to contest that interpretation. Moreover, in certain circumstances, the legislature’s failure to make changes to a long-standing agency interpretation implies its acquiescence to the agency’s construction of the statute." Desrosiers v. Diageo North America, Inc., 314 Conn. 773, 783, 105 A.3d 103 (2014). In the absence of judicial scrutiny, the court traditionally accords "deference to the time-tested interpretation of an agency charged with enforcing the provisions of a statute, provided that the agency’s interpretation has been formally articulated and applied for an extended period of time, and that interpretation is reasonable." Id., 782-83. "The requirements that an interpretation be formally articulated and applied for an extended period of time provide a proper basis for deference because, like judicial review, they ensure that the interpretation is articulated through procedures that allow for robust adversarial testing and in a manner that has general applicability." (Citation omitted; internal quotation marks omitted.) Sarrazin v. Coastal, Inc., 311 Conn. 581, 610-11, 89 A.3d 841 (2014). The requirement that an agency’s interpretation be "formally articulated" ordinarily means the agency’s interpretation should have been promulgated pursuant to formal rule-making or adjudicatory procedures. Id., 611. Such a formal procedure, however, is not uniformly required. Frank v. Department of Children and Families, 312 Conn. 393, 421-22, 94 A.3d 588 (2014).

Judicial activity involving § 38a-323 has been limited and only one case involves the Insurance Commissioner’s bulletin concerning conditional renewals. Royal Indemnity Co. v. King, 512 F.Supp.2d 117 (D.Conn. 2007), aff’d Arrowood Indemnity Co. v. King, 699 F.3d 735 (2d Cir. 2012). In King, a liability lawsuit arose out of an accident in 2002 involving an all-terrain vehicle ("ATV"). The ATV owner’s primary homeowner’s and umbrella insurers commenced a declaratory judgment action contesting coverage for the underlying lawsuit. The umbrella policy that expired in 2000 covered ATVs, but the renewal policy issued that year only provided such coverage if the ATV was listed in the policy declarations. There was a dispute between the parties concerning the nature and timing of the notice given to the insureds of this change in the policy, effective in 2000. The insureds argued that the notice failed to comply with General Statutes § 38a-323 as interpreted in Bulletin PC-42-04. They maintained consequently that the policy’s requirement that ATVs be listed on the declarations page could not be enforced. The court disagreed because it viewed the bulletin as having "changed the legal landscape with respect to the interpretation of [S]ection 38a-323" and, therefore, it could not be applied retroactively. Id., 131. The court did not question whether deference should be paid to the bulletin’s interpretation in the first place and it does not appear that the parties contested that issue. Id., 129 ("[T]he issue presented for review is not whether to accord deference to the [bulletin]").

The Insurance Commissioner’s interpretation of the statute has not been the subject of judicial review. The legal force of the bulletin was presumed and not contested in King because it was not material to the outcome of the case. There are no other cases construing § 38a-323 in light of the bulletin. Thus, the court will only defer to the Insurance Commissioner’s interpretation of the statute if "the agency’s interpretation has been formally articulated and applied for an extended period of time, and that interpretation is reasonable." Desrosiers v. Diageo North America, Inc., supra, 314 Conn. 783. Some court decisions have relied upon Insurance Department bulletins, at least in part, to resolve issues of statutory construction. Renz v. Allstate Ins. Co., 61 Conn.App. 336, 346, 763 A.2d 1072 (2001); Wozniak v. Keystone Ins. Co., Superior Court, judicial district of New Haven, Docket No. CV-95-0376435-S (May 14, 1997, Fracasse, J.) (19 Conn.L.Rptr. 423); Brown v. ITT Hartford Life & Annuity Ins. Co., Superior Court, judicial district of Waterbury, Docket No. CV-97-0158294-S (April 17, 2001, Holzberg, J.) (29 Conn.L.Rptr. 613). These courts have cited such bulletins, however, largely to reinforce conclusions the court reached independently. Other courts have deemed such bulletins "irrelevant." Denitto v. Transamerica Ins., Superior Court, judicial district of Fairfield, Docket No. CV-90-0266438-S (December 2, 1992, Lewis, J.) Given the potentially decisive role deference to the bulletin would have on the issue before this court, it is essential for this court to adhere to the requirements set down by our Supreme Court before deferring to the bulletin.

The principal weakness in the effort to characterize Bulletin PC-42-04 as an interpretive rule is the fact that it was not "formally articulated" by means of a formal rulemaking procedure. Sarrazin v. Coastal, Inc., supra, 311 Conn. 611. While the court arguably dispensed with this requirement in Frank v. Department of Children & Families, supra, 312 Conn. 421-22, in that case the task before the court was different than the one before this court. In Frank, the question was whether a statutory definition of "abuse" was unconstitutionally vague as applied to the plaintiff’s circumstances, resulting in the agency placing his name on a registry of child abusers. The issue, therefore, was whether the plaintiff had fair warning of the effect of the statute and whether the agency was exercising standardless law enforcement. Id., 416-17. The court held the statute was not unconstitutionally vague in light of the guidance provided by the agency in its policy manual, which was not a product of formal rule-making procedures. The court rejected a challenge to its reliance on the policy manual based on the claim that the manual did not have the force of law. Citing its earlier decision in Hogan v. Department of Children & Families, 290 Conn. 545, 964 A.2d 1213 (2009), the court held reliance on the policy manual was appropriate "because the provisions at issue were substantially the same as pending formally promulgated regulations, the policy manual effectively served as a gap filler, and the policy manual is published by the defendant and, thus, available for viewing by the public." Frank v. Department of Children & Families, supra, 312 Conn. 421. Distinguishing Sarrazin v. Coastal, Inc., supra, 311 Conn. 581, the court in Frank emphasized the issue in the case was fair notice, not statutory construction. Id., 422. The court also held that the applicable terms in the policy manual were consistent with the common meaning of "abuse" and other statutory terms.

Although Bulletin PC-42-04 was published to all property and casualty insurers licensed in Connecticut, its interpretation of § 38a-323 has never been the subject of an adversarial proceeding, either in the courts or within the agency in a published declaratory ruling.¹⁶ "A consideration of whether an interpretation is time-tested takes into account both the length of time since it first was articulated and the number of formal decisions applying that interpretation." Sarrazin v. Coastal, Inc., supra, 311 Conn. 611 n. 20. The court concludes that it should not defer to the Insurance Commissioner’s interpretation of the statute because it has not been tested in any meaningful sense, either in the manner in which it was promulgated, by contested administrative proceedings or by judicial scrutiny. Moreover, in the absence of any controversy over the bulletin’s interpretation of the statute, a presumption of legislative acquiescence is not to be drawn even though there is some evidence the legislature was aware of the bulletin and did not contradict its provisions when amending the statue in 2006 and 2012.¹⁷ Department of Public Safety v. State Board of Labor Relations, 296 Conn. 594, 600-01, 996 A.2d 729 (2010). In fact, the portion of the bulletin addressed to "conditional renewals" does not specifically portray itself as an interpretation of the statute. It is worded in such a way as to indicate the Insurance Department found the statute ambiguous and sought to formulate a process by which an insurance company could be assured that it was in compliance with the statute in the eyes of the Department. The bulletin does not say that a failure to follow the outlined procedure is a violation of the statute. It says, instead, that "[t]he Department will not consider an insurer to be in violation of the requirements of Conn. Gen. Stat. § 38a-323" if it does follow that procedure.

16 The court is aware that the Insurance Department, in a 2012 market conduct report concerning Amica Mutual Insurance Co., stated, "It is required that Arnica Mutual Insurance Company comply with Connecticut General Statute Section 38a-323(a) and Bulletin PC 42-04, with regard to homeowner non-renewals." Connecticut Insurance Department, Market Conduct Report, Amica Mutual Insurance Co., Docket No. MC 11-74, January 13, 2012. This statement does not appear to be the result of any contested proceeding. The stipulation and consent order in the report makes no reference to the statute or the bulletin. Moreover, it is not clear that the report refers to conditional renewal notices because the bulletin addresses both the discontinuance of coverage and conditional renewals.

17 Notably in 2006, immediately following the Insurance Commissioner’s testimony at a hearing on a proposed amendment unrelated to the issue before this court, a colloquy between a committee member and an insurance industry representative made reference to Bulletin PC-42-04, with the industry representative summarizing its content and also observing that it "doesn’t have the same force, obviously, as a regulation or statute" but that it would enable the Insurance Department to bring a company in for a hearing. Testimony, Insurance and Real Estate Committee (March 2, 2006). This is evidence that the legislature was actually aware of the content of Bulletin PC-42-04, but not that the bulletin was considered or intended to be a formally articulated interpretation of the provisions of the statute by the Insurance Department.

Although the bulletin is not to be accorded deference, that does not mean it must be ignored, or that its interpretation of "nonrenewal" under the statute is unreasonable or incorrect. Renz v. Allstate Ins. Co., supra, 61 Conn.App. 346. Nor does the fact that Royal Indemnity Co. v. King, supra, 512 F.Supp.2d 117, did not decide whether deference to the bulletin was required mean that decision is irrelevant to the question of statutory interpretation. In King, without reference to the bulletin, the court recognized the concept of a "conditional nonrenewal" was within the scope of the statute even though the statute, as written in 2000 and in 2004, only required sixty days advance notice of a "nonrenewal." The court concluded that the policy change at issue there, requiring ATVs be listed in the declarations, did not rise to the level of a conditional nonrenewal because it did not involve a "substantial" change in the coverage and § 38a-323 "did not require an insurance company to nonrenew a plan, conditionally or otherwise, in order to effect any change to the policy, no matter how minor." Id., 132. (The insurance company "renewed the Kings’ policy with essentially the same coverage.") Although King is distinguishable from this case, it is significant here in light of the court’s understanding of the statute without reference to the bulletin. It does appear to this court that, as the court in King implicitly recognized, the Insurance Commissioner was attempting to address a perceived ambiguity in the statute concerning what constitutes a "nonrenewal" subject to the statute’s notice requirements when issuing the bulletin. Accepting that there is more than one plausible interpretation of the statute, one contemplating a complete cessation of coverage and the other just a substantial change in coverage, the court must interpret the statute in a manner that carries out the legislature’s intent. Tuxis Ohr’s Fuel, Inc. v. Administrator, Unemployment Compensation Act, supra, 309 Conn. 424-25.

The clear legislative purpose underlying § 38a-323 from the outset was to provide advance notice to a policyholder that the coverage he or she has under an existing policy will no longer be available, or will be available at a different price. The legislature determined that insurers must provide such notice in advance of the existing policy’s expiration to provide the policyholder a meaningful opportunity to explore alternatives. Where a substantial change in the scope of coverage is proposed, the legislative purpose can only be achieved when the policyholder has advance notice of the proposed changes. The insured’s advance knowledge of a substantial change in the scope of coverage is essential if, as the legislature intended, the insured is to have time to intelligently explore alternatives to the contract being offered by the insurer. Construing "nonrenewal" to include substantial changes in the terms and conditions of coverage also comports with the common understanding of "renewal" in the context of insurance law and Connecticut case law.¹⁸ The court therefore concludes that the statute as written in 2007 required sixty days’ notice of a substantial change in the scope of coverage in a proposed renewal policy and an explanation of the change(s) in order for an insurer to be in compliance with the statute. Whether an insurer has satisfied that requirement is to be measured by the language in the statute, however, not the bulletin.¹⁹ Consistent with the language of the statute, the insurer’s notice must specify the reasons for nonrenewal, which of necessity requires an explanation of the changes to the policy. Whether any changes in coverage are substantial and whether an insurer has complied with the statute by specifying what those changes are sixty days in advance of the existing policy’s expiration are questions of fact.²⁰

18 See also United States Fire Ins. Co. v. Southern Security Life Ins. Co., 710 So.2d 130 (Fla.Dist.Ct.App. 1998) (reaching the same conclusion pursuant to a similarly worded statute).

19 Even the legislature’s 2017 amendment to the statute uses different language to describe the required contents of a "conditional renewal" notice than the language contained in the Insurance Commissioner’s bulletin. The amended statutory language is not retroactive, as discussed above, and the only language with the force of law behind it prior to 2017 is the language of the original statute.

20 Whether a change in terms and conditions is substantial could, under some circumstances, be resolved as a matter of law where resolving the issue merely requires that the court exercise its legal function to interpret a contract. In this case the legal context is not clear enough in light of the issues pending before the Connecticut Supreme Court in Karas v. Liberty Ins. Corp., Connecticut Supreme Court, Docket No. SC 20149 and Vera v. Liberty Mutual Ins. Co., Connecticut Supreme Court, Docket No. SC 20178. Those cases will resolve whether the standard adopted in Beach v. Middlesex Mutual Assurance Co., supra, 205 Conn. 246 is applicable and, if so, how it is to be applied. Based on the existing case law at the trial court level, however, it does appear to at least raise a question of fact whether the change in NLC’s collapse coverage involves a substantial change in the scope of coverage. In light of the pendency of Karas and Vera, which will directly impact the interpretation and application of the collapse coverage in NLC’s earlier policies, the court does not reach the question whether the change in coverage was substantial as a matter of law.

Even if § 38a-323 required advance notice of NLC’s change in the collapse coverage, the question remains, what consequence flows from NLC’s failure to provide such notice. The statute provides for a "renewal of the policy for a term of not less than one year" in the event that an insurer fails to provide a notice of nonrenewal. Applied to these circumstances, that would at least result in the extension of the collapse coverage provided in NLC’s 2006-2007 policy through the 2007-2008 policy period. Because the plaintiffs’ loss did not manifest during that policy period, however, the later rendition of the collapse coverage would still apply to the loss.²¹ The plaintiffs argue, however, that the older version of the collapse coverage would still apply in the 2008-2009 policy period unless NLC gave notice of the change in the collapse coverage sixty days in advance of the expiration of the 2007-2008 policy, and so on through the succeeding policy periods right up to the time of the loss. Logic supports the plaintiffs’ position. The same considerations applicable to the 2007-2008 policy involving changes to the collapse coverage applied as the plaintiffs entered into a renewal of the 2008-2009 policy. Unless otherwise called to their attention, the plaintiffs were entitled to assume that the original collapse coverage they purchased remained a part of their policy through successive renewals. Each policy is a separate contract. Kane v. American Ins. Co., supra, 52 Conn.App. 501. The 2007-2008 policy must be viewed, pursuant to the statute, as a separate contract containing the collapse coverage as written in the original and the 2006-2007 policies. In order to change that coverage for 2008-2009, NLC was required to comply with the notice requirements of § 38a-323. Its failure to do so has the same effect on that policy as it had on the 2007-2008 policy, and so on up until the time of the loss.

21 The court recognizes this might not be the case if Mr. Grandpré ’s testimony that the deterioration of the basement walls reached a point of substantial impairment of structural integrity up to ten years prior to his inspection were admissible.

NLC argues, however, that the 2007-2008 policy effectively serves as a substitute for the notice required by the statute and gave the plaintiffs an entire year to seek and consider alternative coverage. Quoting American Home Assurance Co. v. Abrams, 69 F.Supp.2d 339, 351-52 (D.Conn. 1999), NLC argues that "[u]nder Connecticut law, the insured is charged with knowledge of the terms and conditions of the policy." In support of this proposition, Abrams cites Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118 (2d Cir. 1990), which in turn cites several New York decisions. More importantly, NLC’s argument fails to distinguish between an original policy and a renewal. Of course the insured is charged with knowledge of the contents of an original policy- it could not function as a contract otherwise. The question here is whether an insured is charged with the responsibility to identify revisions to coverage included in a "renewal" policy, even if the insured would have to do a side by side comparison of the existing policy and the renewal policy in order to do so.

When an insured purchases an original policy of insurance he may be expected to read it and the law may fairly impose upon him such restrictions, conditions and limitations as the average insured would ascertain from such reading. However, where the stated period of coverage in the original policy is about to expire and the insurance company simply sends a renewal policy for the new period of coverage, the insured, in all likelihood, will not read it over again and may not fairly be expected to do so. Absent notification that there have been changes in the restrictions, conditions or limitations of the policy, the insured is justly entitled to assume that they remain the same and that his coverage has not in anywise been lessened.

Bauman v. Royal Indemnity Co., 174 A.2d 585 (N.J. 1961). "Most jurisdictions impose an affirmative duty on the insurer to make the insured aware of changes inserted into a renewal policy; absent notice of the change, the insured is entitled to coverage as the policy originally stated." Government Employees Ins. Co. v. Ropka, 536 A.2d 1214 (Md.Ct.Spec.App. 1988). This view is consistent with Connecticut law. In Palmer v. Hartford Fire Ins. Co., supra, 54 Conn. 488, the defendant proposed to renew an insurance policy upon the same terms and conditions as the original policy. When the defendant actually sent the policy, however, it included a co-insurance clause that was not in the original policy. The insured never read the renewal policy, but the court reformed the policy because the insured could not reasonably be expected to read the renewal policy to ensure its contents were consistent with the original agreement. See also Back v. People’s National Fire Ins. Co., 97 Conn. 336, 116 A. 603 (1922); Fidelity & Casualty Co. v. Palmer, 91 Conn. 410, 418, 99 A. 1052 (1917) ("[I]t has never been the law of this State that the mere omission to read an insurance policy, or to know all its contents, would bar any relief by way of reformation of such instrument").

Contrary to NLC’s argument, § 38a-323(c) does not limit the consequence of noncompliance to one year of additional coverage upon the terms and conditions of the existing policy. The statute only provides that such coverage must be extended for a period "not less than one year."²² Other courts faced with similar circumstances have applied the policy language contained in an original policy, whose terms were changed without notice, even though several renewal periods intervened between the change in the coverage and the insured’s loss. United States Fire Ins. Co. v. Southern Security Life Ins. Co., supra, 710 So.2d 130. In the current posture of this case, it is not necessary to resolve what the consequence is for NLC’s failure to notify the plaintiffs of the change in the collapse coverage in 2007. The plaintiffs have not moved for summary judgment and additional facts could impact what the remedy is. Without attempting to foresee all potential scenarios it could be, for example, that the plaintiffs actually became aware of the changes to the collapse coverage prior to the inception of the 2015-2016 policy and nevertheless continued to accept new policies containing that language. The record is only sufficient at this point to deny NLC’s motion for summary judgment to the extent it is based on the applicability of the collapse coverage language that commenced with the 2007-2008 policy.

22 The plaintiffs’ complaint does not include a count or a prayer for relief seeking reformation of the policy. NLC, however, has not raised this procedural argument on summary judgment.

III. PLAINTIFFS’ CUTPA/CUIPA CLAIM

The plaintiffs allege that NLC committed an unfair claims settlement practice when it denied their claim. They allege that NLC, through its participation in the Insurance Services Office (ISO), knows that there are many claims involving decaying concrete walls in northeastern Connecticut, that most insurers deny coverage on certain specified grounds, that NLC has knowledge of at least one case in which a homeowner was awarded coverage under the policy language contained in NLC’s earlier policies and that, notwithstanding NLC’s awareness of the collapse coverage in its policies, as well as the definition of "collapse" in its policies, NLC gave a "false and misleading reason for the denial of coverage," confirming its participation in an "industry wide practice of denying coverage for concrete decay claims." The plaintiffs maintain that the denial of their claim under these circumstances violated General Statutes § 38a-816(6)(f), which establishes as an unfair insurance practice "not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear." Such conduct is considered an unfair insurance practice if it is committed or performed "with such frequency as to indicate a general business practice."

NLC has moved for summary judgment on the plaintiffs’ CUTPA/CUIPA claim on several grounds- that there is no coverage, that coverage was at least not "reasonably clear" when it denied the claim and that, in any event, the plaintiffs have failed to produce any evidence of a general business practice. NLC has submitted an affidavit in support of its motion for summary judgment indicating that it handled the plaintiffs’ claim individually, did not dismiss or deny it arbitrarily, but conducted an investigation of the claim and only then denied it. NLC’s denial letter reflects that it evaluated the plaintiff’s claim under the collapse coverage contained in the 2015-2016 policy.

This court has held that the 2015-2016 policy is the applicable policy and that the policy’s definition of "collapse" clearly precludes coverage for the plaintiffs’ claim. But for NLC’s failure to notify the plaintiffs of the change in the collapse coverage initiated in 2007, the court would have upheld NLC’s denial of coverage on summary judgment. There are no allegations in the plaintiffs’ CUTPA/CUIPA count, however, related to NLC’s failure to provide notice of the change in the scope of coverage. "When CUTPA and CUIPA claims are premised on denial of coverage under an insurance policy and the insurer’s interpretation of the policy is correct, ‘there can be no genuine issue of material fact as to whether the application of that interpretation as a general business practice constituted oppressive, unethical or unscrupulous conduct in violation of the statues.’" Liston-Smith v. CSAA Fire & Casualty Ins. Co., United States District Court, Docket No. 3:16-CV-00510 (JCH) (D.Conn. Dec. 15, 2017), quoting Zulick v. Patrons Mutual Ins. Co., 287 Conn. 367, 378, 949 A.2d 1084 (2008). In this case, NLC’s denial of coverage was premised on an interpretation of the 2015-2016 policy that the court has determined is correct. The plaintiffs have neither alleged nor submitted any evidence to suggest that NLC knew or had reason to know that it should be applying the pre-2007 policy language due to the failure to provide a notice of nonrenewal in 2007. Because the CUTPA/CUIPA claim is not based on NLC’s failure to provide notice of the change in policy language, NLC is entitled to summary judgment on that claim.

Further, the plaintiffs’ CUTPA/CUIPA allegations arise out of § 38a-816(6), which requires proof that the defendant has performed any of the statute’s specified unfair claims practices "with such frequency as to indicate a general business practice." This means the plaintiffs must allege more than just a singular failure to settle their claim, they must allege the defendant has engaged in the same unfair practice in the processing of other claims. Lees v. Middlesex Ins. Co., 229 Conn. 842, 849, 643 A.2d 1242 (1994) ("[T]he legislature has manifested a clear intent to exempt from coverage under CUIPA isolated instances of insurer misconduct"). Even if the court could somehow construe the plaintiff’s CUTPA/CUIPA claim to include the issue of the failure to provide a nonrenewal notice explaining the changes in coverage, the only evidence of a general business practice identified by the plaintiffs is their citation of four other lawsuits in which, they claim, NLC denied coverage for claims similar to theirs. Two of those cases, however, were withdrawn prior to trial, ²³ one was resolved in favor of NLC on summary judgment²⁴ and one remains pending.²⁵ In the case still pending there is no claim that NLC failed to provide notice of a change in the collapse coverage and there is no CUTPA/CUIPA claim either. Thus there is insufficient evidence of a general business practice to support the plaintiffs’ unfair claims settlement practices claim under CUTPA/CUIPA.

23 Gounaris v. New London Mutual Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-18-6013699-S; Voght v. New London Mutual Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-17-6012186-S.

24 Heim v. New London Mutual Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-16-6010026-S.

25 Hilton v. New London Mutual Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-18-6013700-S.

The court denied summary judgment on counts one and two due to the issues raised by NLC’s failure to provide a nonrenewal notice in accordance with § 38a-323 when it changed the policy language in 2007. The plaintiffs’ CUTPA/CUIPA claim, however, is not based on that conduct. For that reason and because there is no evidence to support the essential element of a general business practice to sustain the allegation of an unfair claims settlement practice, the court grants summary judgment on the CUTPA/CUIPA claim.

CONCLUSION

The court concludes that NLC’s failure to provide a notice of nonrenewal under § 38a-323 in 2007, when it changed the terms of the collapse coverage, raises issues concerning compliance with the statute as well as the consequences of noncompliance that cannot be resolved on the existing record. Even though the court concludes that the 2015-2016 policy is the applicable policy, the court is unable to resolve on summary judgment whether the earlier collapse coverage language must be deemed a part of that policy and, therefore, must deny NLC’s motion for summary judgment as to counts one and two. As to the plaintiffs’ CUTPA/CUIPA claim the court concludes that NLC’s denial of coverage under the terms of the 2015-2016 policy was reasonable as a matter of law and the plaintiffs’ CUTPA/CUIPA claim is not based on NLC’s failure to comply with § 38a-323. Even if it were, there is insufficient evidence that NLC’s conduct was part of a general business practice as required by CUIPA to establish an unfair claims settlement practice. The court therefore denies NLC’s motion for summary judgment on counts one and two, but grants the motion as to count three.