Opinion
No. X01 CV-02-0179296-S
October 21, 2003
Memorandum of Decision Motion to Strike
This action arises out of a fire in the plaintiffs' home, which fire resulted in property damage to the home and a business on the same premises. Essentially, the claim is that a Nationwide agent promised them that, in writing a new policy for them, he would provide the same coverage they then had with another carrier. That policy provided business coverage. The plaintiffs agreed and the agent canceled the old policy and wrote a new one which did not cover the loss to their business. The Second Revised Complaint of January 10, 2002 asserts twenty-three (23) causes of action, four (4) of which the defendant, Nationwide Mutual Fire Insurance Company, Inc., here moves to strike.
While that complaint is dated January 10, "2002" it is clear from the order of pleadings, "2003" is the year of filing.
A motion to strike tests the legal sufficiency of the allegations of a complaint to state a claim upon which relief can be granted. Vacco v. Microsoft Corp., 260 Conn. 59, 65 (2002); Practice Book § 10-39. The trial court's role is to examine the complaint, construed in favor of the pleader, to determine whether a legally sufficient cause of action has been pled. Suffield Development Associates Ltd. Partnership v. National Loan Investors, L.P., 260 Conn. 766, 772 (2002). The requirement of favorable construction does not extend, however, to legal opinions or conclusions stated in the complaint but only to factual allegations and facts "necessarily implied and fairly provable under the allegations." Forbes v. Ballaro, 31 Conn. App. 235, 239 (1993). The plaintiff must plead facts, not legal conclusions. P.B. § 10-1.
The fifteenth and twenty-third counts allege a breach of the duty of good faith and fair dealing; the fifteenth count alleges the agent — as an agent of Nationwide — violated that duty by misrepresenting he would replace their old policy with one providing the same coverage and that he knew that to be false; the twenty-third count alleges Nationwide breached that duty by failing to write a policy insuring the plaintiffs' business. The defendant claims both counts fail to allege a sufficient factual predicate to support the bad faith claims, which it states are pled as legal conclusions.
The fifteenth count alleges: 1) the Nationwide agent offered to sell the plaintiff's Nationwide policies which would provide the same coverage for their home, business, and autos that a single policy they then had with Farm Family provided; 2) based on that representation, the plaintiffs agreed to purchase the new Nationwide policies and authorized the agent to cancel their Farm Family policy; 3) Nationwide later denied coverage for fire losses to their business and business premises; and 4) Nationwide is liable for their damages because their agent breached the implied covenant of good faith and fair dealing by failing to procure a policy insuring their business and business premises. "Bad faith is not simply bad judgment or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliguity . . . it contemplates a state of mind affirmatively operating with furtive design or ill will." Buckman v. People Express, Inc., 205 Conn. 166, 171 (1987). Fairly read, the fifteenth count alleges negligence by the agent in not seeing to it the plaintiffs got in the new policies what they had in the Farm Family policy. Proof of mere negligence fails to support a showing of dishonest purpose. Wadia Enterprises, Inc. v. Hirschfeld, 224 Conn. 240, 248-49 (1992). The lynchpin of a bad faith claim is a state of mind characterized by an intent to mislead or deceive or defraud. Id. "An honest mistake does not rise to the level of bad faith." Id. at 249. Nothing in the allegations here assert a dishonest purpose or conscious wrongdoing. It is not sufficient to state the agent, having read the Farm Family policy, "knew or should have known" the plaintiffs wanted a policy providing the same coverage as their prior policy (Paragraph 16b), that his failure to apply for a policy affording business coverage would damage them (Paragraph 16a), that they relied on him to provide them such a policy (Paragraph 16c), or that the resulting policies did not insure the plaintiffs' business (Paragraph 16d). Those allegations support a claim for negligence but, absent an allegation of sinister motive or bad purpose, they are insufficient to assert a bad faith claim. Contrary to the plaintiffs' claim, there is no meaningful distinction between, for example, the refusal to pay a claim and, as here, the alleged failure to procure a policy with appropriate coverage.
The allegations of count twenty-three differ only in that the only predicate act alleged is the carrier's negligence in failing to write a policy affording business coverage. See Paragraph 15 of the twenty-first count incorporated in the twenty-third count and Paragraph 16 of the twenty-third count. Nothing therein suggests that failure was prompted by ill will or bad motive. Though specific words (i.e., "bad motive") are not required, the court must be able to infer bad motive from the facts alleged.
The plaintiffs argue a prior trial court's denial of a co-defendant's motion to strike allegedly based upon the same grounds ("vague" or "conclusory" allegations) constitute the "law of the case and should be followed with respect to the same issues raised by this defendant." Memorandum at Page 11. Clearly, new pleadings intended to raise again a question of law already decided are not to be favored and this court is aware an inconsistent ruling here could serve to encourage forum shopping, a practice which is never acceptable. In the instant case, however, the co-defendants earlier moved to strike those counts alleging breach of the covenant of good faith and fair dealing as to them because the plaintiffs failed to allege the defendants acted in a malicious and wanton manner. See p. 2 of Motion to Strike (#108) and p. 9 of supporting memorandum. It further alleged a failure to provide specific allegations. The court's articulation of its denial of the motion as to the bad faith counts reads, "[T]he plaintiff pled that the defendant acted in bad faith by violating the duty of good faith and fair dealing by misrepresenting to them the coverage which he claimed to secure for them. The words `he acted in bad faith' are not specifically used or required." Articulation, 10/7/02, #113. Thus, the ground urged by the co-defendants in the earlier motion is not here claimed. Further, the plaintiffs' statement on p. 7 of its memorandum that the earlier court "relied on those cases that note that it `is axiomatic that the implied duty of good faith and fair dealing is a covenant implied into a contract or contractual relationship'" is entirely unfounded. The court originally denied the motion as to all counts without comment or written decision. In response to the co-defendants' Motion for Articulation (#112), the court's response as to the bad faith counts was limited to that which is above stated. Contrary to the plaintiffs' claim, all that can be stated as to the court's reasoning is limited to the court's own words; there is simply no basis for the plaintiffs' asserting as they do on p. 7 of their memorandum — the court relied on a specific line of cases. As the parties here note, the law of the case is not "written in stone." Breen v. Phelps, 186 Conn. 86, 99 (1982). "A judge is not bound to follow the decisions of another judge made at an earlier stage of the proceedings, and if the same point is again raised he has the same right to reconsider the question as if he had himself made the original decision." (Citations omitted.) Id. at 98.
Because the fifteenth and twenty-third counts omit any factual allegations from which one could reasonably infer bad faith, the motion to strike is granted as to those counts.
Count Eighteen asserts a CUTPA cause of action pursuant to C.G.S. § 42-110b, et seq. in that the conduct of Nationwide's agent is alleged to constitute an unfair and deceptive practice and also an unfair insurance practice under C.G.S. § 38a-815, et seq., the Connecticut Unfair Insurance Practices Act (CUIPA) in that the agent made representations to the plaintiffs regarding Nationwide policies and the insurance business, which representations were untrue, deceptive and misleading. The defendant here claims the plaintiffs have failed to state a legally valid claim under § 38a-816(1) (2) and thus do not state a claim under either CUIPA or CUTPA.
Paragraph 22 of Count Eighteen alleges violations of §§ 38a-816(1)(a) 38a-816(1)(f), and 38a-816(2), which violations created a course of conduct that "is a violation of the CUIPA and amounts to an unfair trade practice as defined and prohibited by Connecticut General Statute § 42a-110a, et seq., the Connecticut Unfair Trade Practices Act." Paragraph 23.
C.G.S. § 38a-816(1)(a) provides:
The following are defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:
(1) Misrepresentations and false advertising of insurance policies. Making, issuing or circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement, sales presentation, omission or comparison which: (a) Misrepresents the benefits, advantages, conditions or terms of any insurance policy;
Subsection (f) of C.G.S. § 38a-816(1) provides:
(1) Misrepresentations and false advertising of insurance policies. Making, issuing or circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement, sales presentation, omission or comparison which: (f) is a misrepresentation for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion or surrender of any insurance policy;
Section 2 of C.G.S. § 38a-816 provides the following is a violation of CUIPA and an unfair trade practice prohibited by C.G.S. § 42-110a et seq.
(2) False information and advertising generally. Making, publishing, disseminating, circulating or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated or placed before the public, in a newspaper, magazine or other publication, or in the form of a notice, circular, pamphlet, letter or poster, or over any radio or television station, or in any other way, an advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading.
The defendant claims § 38a-816(1) proscribes activities of insurance advertising or sales techniques "through the use of written materials." P. 13 of supporting memorandum. Yet nothing in the statutory language requires the misrepresentation be written. By its express terms, the "making" of "any . . . statement" which "[m]isrepresents the benefits, advantages, conditions or terms of any insurance policy" is actionable under § 38a-816(1). Though the court is referred to Vesco v. Utica Mutual Insurance Company et al., 2001 WL 950675 (Conn.Super.Ct., July 18, 2001), that case does not require the misrepresentation always be in writing and is further not helpful to the defendant because there was in Vesco a written insurance contract affording bodily injury protection whereas, in the instant case, it is claimed there was no Nationwide policy affording business loss coverage. Though, as the defendant states, CUIPA is a remedial statute and is therefore to be strictly construed, the use of the disjunctive means, for example, the misrepresentation need not be made, issued, and circulated; making, issuing, or circulating any statement which misrepresents the benefits or advantages or conditions or terms of an insurance policy is actionable under § 38a-816(1)(a) and, if the purpose of that misrepresentation is, as clearly can be interred from the facts alleged in the complaint, to induce the surrender of the Farm Family policy for a Nationwide policy, it is actionable under § 38a-816(1)(f). The misrepresentation would have to be made "for the purpose of inducing or tending to induce" the surrender of the existing policy. Id. Heyman Associates No. 1 v. Insurance Company of Pennsylvania et al., 231 Conn. 756, 795 (1995).
The Vesco plaintiff alleged the insurer's refusal to pay the amount he demanded in settlement of his personal injury claim breached the implied covenant of good faith and fair dealing under the Utica policy which provided uninsured motorist coverage.
Section 38a-816(2), however, requires an untrue, deceptive, or misleading assertion, representation, or statement with respect to the insurance business must be "before the public" to be actionable. No fact alleged either directly states or permits an inference there was public dissemination of any statement by the agent to the plaintiffs nor do the plaintiffs in their memorandum of opposition address that requirement.
The motion to strike the cause of action based upon violation of § 38a-816(1) is denied; the motion to strike that portion of Count Eighteen that alleges a violation of § 38a-816(2) is granted.
Count Twenty repeats the allegations of count eighteen regarding the agent's (and, therefore, Nationwide's) alleged misrepresentations and claims the failure of Nationwide to pay the plaintiffs' claims for losses to their business and business premises constitutes a violation of both CUIPA and CUTPA. The CUIPA violations are specifically based upon § 38a-816(1), (2) and (6). The defendants have moved to strike this count for the plaintiffs' failure to allege a general business practice. Section 38a-816(6) expressly provides unfair claim settlement practices must be committed or performed with such frequency as to indicate "a general business practice . . ." The plaintiffs concede this point. Memorandum, at p. 17. As to sub-Sections (1) and (2) of § 38a-816, the parties iterate arguments made regarding those allegations as asserted in Count Eighteen and the court's rulings accordingly apply. Thus, the motion to strike is denied as to § 38a-816(1) and granted as to 38a-816(2) and (6).
The Motion to Strike is granted as to Counts Fifteen (15), Twenty-Three (23), that portion of Count Eighteen (18) premised upon a violation of § 38a-816(2), and those portions of Count Twenty (20) which assert violations of §§ 38a-816(2) and (6). It is denied as to those portions of Counts Eighteen (18) and Twenty (20) premised upon a violation of § 38a-816(1).
Sheedy, J.
10/15/03