Opinion
No. FST CV 10 6003636 S
July 8, 2011
MEMORANDUM OF DECISION
The plaintiff, Amica Mutual Insurance Company, has brought this subrogation action seeking to recover funds that it paid to its insureds following a fire on August 8, 2008, which severely damaged premises covered by a fire insurance policy issued by the plaintiff. In its complaint, the plaintiff alleges that the fire was caused by the negligence of the defendant, Fassarella Pro Painting Design, LLC. Presently before the court is the plaintiff's motion to strike dated February 24, 2011. In that motion, the plaintiff seeks to strike the defendant's first and second special defenses and the defendant's first and second counterclaims dated February 8, 2011.
DISCUSSION
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any [pleading] . . . to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498 (2003). "A party wanting to contest the legal sufficiency of a special defense may do so by filing a motion to strike." Barasso v. Rear Still Hill Road, LLC, 64 Conn.App. 9, 13 (2001). In ruling on a motion to strike, the court must accept as true the facts alleged in the special defenses and construe them in the manner most favorable to sustaining their legal sufficiency. Connecticut National Bank v. Douglas, 221 Conn. 530, 536, (1992). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . It is fundamental that in determining the sufficiency of a complaint challenged by [an opposing party's] motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted . . . Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically." (Internal quotation marks omitted.) Violano v. Fernandez, 280 Conn. 310, 318 (2006).
CT Page 15011
DEFENDANT'S PROCEDURAL OBJECTION TO MOTION TO STRIKE
In it's opposition to the plaintiff's motion to strike dated March 16, 2011, the defendant claims that the plaintiff failed to comply with Practice Book § 10-41, which requires that a motion to strike "shall separately set forth each such claim of insufficiency and shall distinctly specify the reason or reasons of such claimed insufficiency." After reviewing the plaintiff's motion to strike and the memorandum filed in support thereof, the court finds that the plaintiff's motion complies with the foregoing Practice Book requirement.DEFENDANT'S FIRST AND SECOND SPECIAL DEFENSES
The defendant's first special defense alleges: "Plaintiff has failed to state a legally cognizable cause of action for breach of contract, negligence and/or subrogation of damages." The plaintiff claims that this special defense fails to allege any facts to support the defense. The defendant's second special defense alleges: "Plaintiff lacks standing to assert the claims in its Third Amended Complaint." The plaintiff also claims that this special defense fails to allege any facts to support the defense.
Practice Book § 10-50 provides in relevant part: "Facts which are consistent with [the plaintiff's complaint] but show, notwithstanding, that the plaintiff has no cause of action, must be specifically alleged." In its opposition to the plaintiff's motion to strike, the defendant does not address the motion as it relates to its first and second special defenses. The court agrees with the plaintiff that neither of the defendant's first two special defenses allege facts adequate to support a special defense. Accordingly, the plaintiff's motion to strike those special defenses is granted.
DEFENDANT'S FIRST COUNTERCLAIM — SPOLIATION OF EVIDENCE
The defendant's first counterclaim alleges that the plaintiff intentionally engaged in spoliation of evidence, thereby hindering the defendant's defense of the plaintiff's claims. The plaintiff moves to strike the first counterclaim on the ground that the tort of spoliation of evidence is available only to a "first party plaintiff." In its opposition to the motion to strike, the defendant argues that there is no logical reason why a defendant who is harmed by an adversary's intentional spoliation of evidence should not be able to collect damages commensurate with the harm that resulted from the spoliation.
A cause of action for intentional spoliation of evidence was first recognized by our Supreme Court in Rizzuto v. Davidson Ladders, Inc., 280 Conn. 225 (2006). The Court defined intentional spoliation of evidence as the "intentional destruction, mutilation, or significant alteration of potential evidence for the purpose of defeating another person's recovery in a civil action." (Internal quotation marks omitted.) Id., 243. The Court held that a cause of action for intentional spoliation of evidence includes the following essential elements: "(1) the defendant's knowledge of a pending or impending civil action involving the plaintiff; (2) the defendant's destruction of evidence; (3) in bad faith, that is, with intent to deprive the plaintiff of his cause of action; (4) the plaintiff's inability to establish a prima facie case without the spoliated evidence; and (5) damages." Id., 244-45.
The Court reasoned that the cause of action is appropriate when a first-party defendant destroys evidence intentionally with the purpose and effect of precluding a plaintiff from fulfilling his burden of production in a pending or impending case. Id., 235. As the Court noted, an adverse impact on a plaintiff's case is "a critical element of the intentional spoliation tort." Id., 230, citing M.M. Koesel T.L. Turnbull, Spoliation of Evidence: Sanctions and Remedies for Destruction of Evidence in Civil Litigation (2d Ed. 2006), p. 93. The Court explained "the plaintiff's burden of proof with respect to causation and damages. To establish proximate causation, the plaintiff must prove that the defendants' intentional, bad faith destruction of evidence rendered the plaintiff unable to establish a prima facie case in the underlying litigation." Id., 246, citing Smith v. Atkinson, 771 So.2d 429, 434 (Ala. 2000) ("in order for a plaintiff to show proximate cause, the trier of fact must determine that the lost or destroyed evidence was so important to the plaintiff's claim in the underlying action that without that evidence the claim did not survive or would not have survived a motion for summary judgment").
Under the Court's reasoning, the cause of action for spoliation of evidence is a substitute for the underlying cause of action, which the plaintiff can no longer successfully pursue because of the defendant's wrongful destruction of evidence. In the present case, the defendant does not claim that the evidence allegedly destroyed by the plaintiff or the plaintiff's subrogors was essential to an underlying cause of action. Instead, it claims that the evidence was essential to its defense of the claims brought by the plaintiff. The defendant's counterclaim lacks one of the essential elements of the tort of spoliation of evidence as outlined in Rizzuto: the inability of a plaintiff to establish a prima facie case without the spoliated evidence.
The defendant is not without remedies if, in fact, any evidence potentially relevant to its defense was wrongfully destroyed. In Beers v. Bayliner Marine Corp., 236 Conn. 769, 777-79 (1996), the Court held that "an adverse inference may be drawn against a party who has destroyed evidence only if the trier of fact is satisfied that the party who seeks the adverse inference has proven the following. First, the spoliation must have been intentional . . . By this, we do not mean that there must have been an intent to perpetrate a fraud by the party or his agent who destroyed the evidence but, rather, that the evidence had been disposed of intentionally and not merely destroyed inadvertently . . . Second, the destroyed evidence must be relevant to the issue or matter for which the party seeks the inference. For example, the spoliation of a machine may raise an adverse inference with respect to a claim that that particular machine was defective, but such an inference may not be drawn with respect to a claim based upon design defect when the destruction would not hinder the defense . . . Third, the party who seeks the inference must have acted with due diligence with respect to the spoliated evidence. For example, the spoliator must be on notice that the evidence should be preserved . . . If the spoliated evidence was necessary for inspection or testing, the party who seeks the inference must have taken all appropriate means to have the evidence produced. This may include, if necessary, an attempt to obtain a court ordered inspection . . . Finally, the jury, if it is the trier of fact, must be instructed that it is not required to draw the inference that the destroyed evidence would be unfavorable but that it may do so upon being satisfied that the above conditions have been met." (Citations omitted.)
In Rizzuto, the Court reiterated that "the trier of fact may draw an inference from the intentional spoliation of evidence that the destroyed evidence would have been unfavorable to the party that destroyed it . . . To be entitled to this inference, the victim of spoliation must prove that: (1) the spoliation was intentional, in the sense that it was purposeful, and not inadvertent; (2) the destroyed evidence was relevant to the issue or matter for which the party seeks the inference; and (3) he or she acted with due diligence with respect to the spoliated evidence . . . [T]he adverse inference is permissive, and not mandatory . . ." (Citations omitted; internal quotation marks omitted.) Rizzuto v. Davidson Ladders, Inc., supra, 280 Conn. 237.
Therefore, the defendant may have remedies if the plaintiff wrongfully destroyed any evidence potentially relevant to the defendant's defense. At the same time, the court finds that Connecticut does not recognize a cause of action in favor of a defendant for a plaintiff's spoliation of evidence. Accordingly, the court grants the plaintiff's motion to strike the defendant's first counterclaim.
CT Page 15014
DEFENDANT'S SECOND COUNTERCLAIM — DECLARATORY JUDGMENT
The defendant's second counterclaim alleges that prior to the date of the fire, the plaintiff had issued a fire insurance policy to Wayne Jarvis and Heather Jarvis insuring the premises located at Cat Rock Road for $1,559,000. The defendant further alleges that after the fire it was discovered that neither Wayne Jarvis nor Heather Jarvis had any interest in the premises and that title was, in fact, held in the name of Cat Rock Nominee Trust and/or Catrock Nominee Trust. The defendant alleges that after the fire the plaintiff reformed the fire insurance policy that it had issued to name Cat Rock Nominee Trust and/or Catrock Nominee Trust as insureds and to increase the coverage under the policy to $1,627,000. The defendant seeks a declaratory judgment that the policy reformation was void and that the policy in effect on the date of the fire is the controlling policy for purposes of the pending litigation.The plaintiff moves to strike the defendant's second counterclaim on the ground that only a party to the contract or a third-party beneficiary may bring an action for contract reformation. The plaintiff thus argues that the defendant lacks standing to bring its second counterclaim. In its opposition to the motion, the defendant argues that it has standing to seek reformation of the contract, as the reformation directly affected the rights and interests of the defendant to certain defenses and also exposed it to claims of subrogation that did not exist immediately after the fire.
Practice Book § 17-55 provides: "A declaratory judgment action may be maintained if all of the following conditions have been met: (1) The party seeking the declaratory judgment has an interest, legal or equitable, by reason of danger of loss or of uncertainty as to the party's rights or other jural relations; (2) There is an actual bona fide and substantial question or issue in dispute or substantial uncertainty of legal relations which requires settlement between the parties; and (3) In the event that there is another form of proceeding that can provide the party seeking the declaratory judgment immediate redress, the court is of the opinion that such party should be allowed to proceed with the claim for declaratory judgment despite the existence of such alternate procedure." Moreover, "[t]he defendant in any appropriate action may seek a declaratory judgment by a counterclaim." Practice Book § 17-56(a)(5).
In addition to the three elements mentioned above for seeking declaratory relief, the plaintiff also must have standing. "The question of standing [to pursue a declaratory judgment] is essentially one of aggrievement . . . A party bringing suit must demonstrate a legal interest in the controversy that can be distinguished from the interest of the general public." (Citations omitted; internal quotation marks omitted.) American States Ins. Corp. v. Peci, Superior Court, judicial district of Danbury, Docket No. 319343 (July 7, 1995, Stodolink, J.) ( 15 Conn. L. Rptr. 97, 98); see also Tasini v. New York Times Co., 184 F.Sup.2d 350, 356 (S.D.N.Y. 2002) ("[t]he determination of whether a plaintiff has standing . . . is antecedent to any declaratory judgment determination. A court must first satisfy itself that the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment").
The party must have standing not only to seek the declaratory judgment action, but also to bring a claim on the underlying action. "Since it is the underlying cause of action of the defendant against the plaintiff that is actually litigated in a declaratory judgment action, a party bringing a declaratory judgment action must have been a proper party had the defendant brought suit on the underlying cause of action." 22A Am.Jur.2d, Declaratory Judgments § 218 (2011). Thus, in determining whether a party may bring a declaratory judgment action, the question becomes whether the party would have standing to bring suit on the underlying cause of action. This principle applies to contract cases. Id. ("[t]he rules with respect to standing in declaratory judgment actions have been applied to contract actions)." Accordingly, if a party lacks standing to pursue a contract cause of action, then that party cannot bring a declaratory judgment action regarding that contract.
Given that framework, it is necessary to examine fundamental principles of standing as they relate to contract law. "It is well settled that one who [is] neither a party to a contract nor a contemplated beneficiary thereof cannot sue to enforce the promises of the contract . . ." (Internal quotation marks omitted.) Dow Condon, Inc. v. Brookfield Development Corp., 266 Conn. 572, 579 (2003). With regard to third parties, "the ultimate test to be applied [in determining whether a person has a right of action as a third party beneficiary] is whether the intent of the parties to the contract was that the promisor should assume a direct obligation to the third party [beneficiary] and . . . that intent is to be determined from the terms of the contract read in the light of the circumstances attending its making, including the motives and purposes of the parties." (Emphasis in original; internal quotation marks omitted.) Grigerik v. Sharpe, 247 Conn. 293, 311-12 (1998). "[A] third party seeking to enforce a contract must allege and prove that the contracting parties intended that the promisor should assume a direct obligation to the third party." (Emphasis in original; internal quotation marks omitted.) Id., 315. Accordingly, absent intent by the contracting parties that one of the parties had an obligation to the third party, that third party lacks standing to enforce the contract.
In addition to there being specific standing rules to enforce a contract, cases have delineated standing principles for voiding or rescinding a contract. "The general rule is that only a party (actual or alleged) to a contract can challenge its validity . . . Obviously, the fact that a third party would be better off if a contract were unenforceable does not give him standing to sue to void the contract." (Citation omitted; internal quotation marks omitted.) Spanish Oaks, Inc. v. Hy-Vee, Inc., 265 Neb. 133, 138, 655 N.W.2d 390 (2003). Thus, only parties to a contract have standing to void it.
Connecticut cases have not addressed the question of whether a non-party to a contract has standing to void that contract or a reformation to that contract. Nevertheless, other jurisdictions have dealt with that issue.
This rule extends to parties who want to void a reformation of a contract. As a preliminary matter, "[r]eformation is appropriate in cases of mutual mistake — that is where, in reducing to writing an agreement made or transaction entered into as intended by the parties thereto, through mistake, common to both parties, the written instrument fails to express the real agreement or transaction . . . [R]eformation is also available in equity when the instrument does not express the true intent of the parties owing to mistake of one party coupled with fraud, actual or constructive, or inequitable conduct on the part of the other." (Citations omitted; internal quotation marks omitted.) Harlach v. Metropolitan Property Liability Ins. Co., 221 Conn. 185, 190-91 (1992). "[O]nly parties and their privies have standing to seek reformation of a contract." American Teleconferencing Services, Ltd. v. Network Billing Systems, LLC, 293 Ga.App. 772, 778, 668 S.E.2d 259 (2008). "Reformation is an action on a written contract and may be had only by the immediate parties thereto and by those standing in privity with them. Even a person with a substantial interest in the contract may not maintain an action for reformation if he is not a party or privy thereto." Merrimack Mutual Fire Ins. Co. v. Allied Fairbanks Bank, 678 S.W.2d 574, 577 (Tex.App. 1984). "Reformation of a liability insurance policy may be sought only by the contracting parties, their assignees or the intended beneficiaries of the insurance contract." International Service Ins. Co. v. Gonzales, 194 Cal.App.3d 110, 118-19, 239 Cal.Rptr. 341 (1987). Thus, a non-party to a contract cannot seek reformation.
To the extent that only parties to a contract can seek a reformation, it follows that only parties to a contract can bring an action to void a reformation. "[I]f all the parties to a contract request reformation of the contract, an outsider has no right to oppose it. If a person not in privity to a contract has no right to maintain an action on that contract, he does not have the right to oppose an action by the parties on the contract." Merrimack Mutual Fire Ins. Co. v. Allied Fairbanks Bank, supra, 678 S.W.2d 577; see also Wright v. Sampson, 830 N.E.2d 1022, 1026 (Ind.Ct.App. 2005) (regarding reformation of property deeds, holding that "the general rule is that one must be a party to or in privity with a party to the deed to be entitled to reform a deed"). Therefore, if a party lacks standing to bring a cause of action as to a contract, that party further lacks the ability to raise any objection to a reformation of that contract.
The court finds that the defendant lacks standing to bring a declaratory judgment action with respect to the fire insurance policy issued by the plaintiff, as the defendant was not a party to that contract. Accordingly, the plaintiff's motion to strike the defendant's second counterclaim is granted.