Opinion
HHDCV136068831S
05-10-2018
Corner House Condominium Association v. State Farm & Casualty Co.
UNPUBLISHED OPINION
Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): Noble, Cesar A., J.
MEMORANDUM OF DECISION
Cesar A. Noble Judge
Before the court is the motion to strike of the defendant, State Farm Fire and Casualty Company, which asserts that the claims of the plaintiff, Corner House and Condominium Association, in the second, third and fourth counts of the plaintiff’s complaint claiming bad faith, negligence and violations of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110b et seq. (CUTPA), and the Connecticut Unfair Insurance Practices Act, General Statutes § 38a-815 (CUIPA), respectively, are legally insufficient. For the reasons that follow the court denies the motion in its entirety.
In its complaint, the plaintiff incorrectly cites " General Statutes § 41-110," which does not exist. The court treats this as a typographical error that does not alter the substance of the motion to strike and does not prejudice the defendant who understood the claim to be one under CUIPA.
FACTS
The plaintiff, Corner House Condominium Association, in a complaint it filed on April 25, 2016, alleges the following facts. The plaintiff owned property located at 229 Franklin Avenue in Hartford, which was insured under a policy issued by the defendant, State Farm Fire and Casualty Company. On May 3, 2015, while the policy was in effect, a motor vehicle collided into a building located on the property, causing damage. The defendant refused to fully compensate the plaintiff for its loss, resulting in monetary damages.
The defendant filed its appearance on May 10, 2016 and filed this motion to strike on August 5, 2016, accompanied by a supporting memorandum of law. On September 7, 2016, the defendant removed this action to the United States District Court for the District of Connecticut. On February 3, 2017, the District Court remanded the action to the Superior Court, concluding the defendant’s removal was untimely. On June 28, 2017, the plaintiff filed its objection, accompanied by a supporting memorandum of law. On April 23, 2018, the court heard oral argument at short calendar.
STANDARD
" The purpose of a motion to strike is to contest ... the legal sufficiency of the allegations of any complaint ... to state a claim upon which relief can be granted." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). In ruling on a motion to strike, the court construes the complaint in the manner most favorable to sustaining its legal sufficiency. Geysen v. Securitas Security Services USA, Inc., 322 Conn. 385, 398, 142 A.3d 227 (2016). " It is fundamental that in determining the sufficiency of a complaint challenged by a defendant’s motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." (Internal quotation marks omitted.) Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006). " If any facts provable under the express and implied allegations in the plaintiff’s complaint support a cause of action ... the complaint is not vulnerable to a motion to strike." Bouchard v. People’s Bank, 219 Conn. 465, 471, 594 A.2d 1 (1991).
DISCUSSION
A. Count Two
The defendant first moves to strike count two of the plaintiff’s complaint, bad faith, on the ground the plaintiff failed to plead the necessary elements for a claim of bad faith. The plaintiff responds, arguing it sufficiently pleaded allegations of bad faith.
" [I]t is axiomatic that the ... duty of good faith and fair dealing is a covenant implied into a contract or a contractual relationship." (Internal quotation marks omitted.) De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424, 432, 849 A.2d 382 (2004). " To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff’s right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith ... Bad faith in general implies ... actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one’s rights or duties, but by some interested or sinister motive ... Bad faith means more than mere negligence; it involves a dishonest purpose." (Citation omitted; internal quotation marks omitted.) Id., 433. " A complete catalogue of the types of bad faith is impossible, but the following types are among those which have been recognized in judicial decisions: evasion of the spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect performance, abuse of a power to specify terms, and interference with or failure to cooperate in the other party’s performance." (Internal quotation marks omitted.) Elm Street Builders, Inc. v. Enterprise Park Condominium Assn., Inc., 63 Conn.App. 657, 667, 778 A.2d 237 (2001).
" The elements of a cause of action alleging a breach of the implied duty of good faith and fair dealing are as follows: (1) the plaintiff and the defendant were parties to a contract under which the plaintiff reasonably expected to receive certain benefits; (2) that the defendant engaged in conduct that injured the plaintiff’s right to receive some or all of those benefits; and (3) that, when committing the acts by which it injured the plaintiff’s right to receive benefits he reasonably expected to receive under the contract, the defendant was acting in bad faith." Canino v. Peerless Ins. Co., Superior Court, judicial district of Hartford, Docket No. CV-13-6043986-S, 2014 WL 2053880 (January 15, 2014, Huddleston, J.). " If the plaintiff fails to set forth factual allegations that the defendant acted in bad faith, a claim for breach of the implied covenant will not lie." (Internal quotation marks omitted.) TD Bank, N.A. v. J&M Holdings, LLC, 143 Conn.App. 340, 349, 70 A.3d 156 (2013).
There is a well-tilled split of authority among Superior Courts as to what factual allegations are sufficient to constitute bad faith. The first line of cases requires specific allegations establishing a dishonest purpose or malice. In alleging a breach of the covenant of good faith and fair dealing, these courts stress that such a claim must be alleged in terms of wanton and malicious injury and evil motive. See, e.g., Brickhouse v. Progressive Casualty Ins. Co., Superior Court, judicial district of New Haven, Docket No. CV-14-6048681-S, 2014 WL 7525594 (December 2, 2014, Wilson, J.). The second line of cases only requires a plaintiff to allege sufficient facts or allegations from which one can make a reasonable inference of sinister motive. Nevertheless, there must be allegations that the defendant purposefully engaged in the conduct at issue. See, e.g., Urban Apparel Plus, LLC v. Sentinel Ins. Co., Superior Court, judicial district of New Haven, Docket No. CV-13-6035293-S, 2013 WL 6171114 (October 31, 2013, Fischer, J.) (57 Conn.L.Rptr. 124, 126).
In the present case, under both lines of cases, the plaintiff has pleaded sufficient facts supporting a bad faith claim. The plaintiff alleges that the defendant collected facts to support the delay and denial of the plaintiff’s claim, misled the plaintiff to believe it would pay the claim, ignored the plaintiff’s requests for documents, and unduly and narrowly interpreted its policy. Further, the plaintiff alleges that the defendant " intentionally and maliciously" undervalued the plaintiff’s claim, misled the plaintiff into believing it was reevaluating the claim, failed to timely respond to the plaintiff’s requests, imposed obstacles to prevent the timely resolution of the claim, and changed its position to find a basis to deny the claim. By using the words " intentionally and maliciously" in connection with specific actions by the defendant, the complaint sufficiently alleges the defendant’s actions were purposeful, harmful, and done with an evil motive: to unjustly deny the plaintiff’s claim. Accordingly, the defendant’s motion to strike count two is denied.
B. Count Three
The defendant next moves to strike count three of the plaintiff’s complaint, negligence, on the ground the plaintiff failed to sufficiently plead a negligence claim. The plaintiff responds, arguing it sufficiently pleaded the claim.
" The essential elements of a cause of action in negligence are well established: duty; breach of that duty; causation; and actual injury." (Internal quotation marks omitted.) Sturm v. Harb Development, LLC, 298 Conn. 124, 139, 2 A.3d 859 (2010). " Whether a duty exists is a question of law for the court, and only if the court finds that such a duty exists does the trier of fact consider whether that duty was breached." (Internal quotation marks omitted.) Lawrence v. O&G Industries, Inc., 319 Conn. 641, 649, 126 A.3d 569 (2015). " [A] duty of care may arise out of a contract ..." (Internal quotation marks omitted.) Sturm v. Harb Development, LLC, supra, 298 Conn. 140. Nevertheless, " [a]n action in contract is for the breach of a duty arising out of a contract; an action in tort is for a breach of duty imposed by law." Gazo v. Stamford, 255 Conn. 245, 263, 765 A.2d 505 (2001). There is an implicit common-law duty of good faith and fair dealing in every contract. De La Concha of Hartford, Inc. v. Aetna Life Ins. Co., supra, 269 Conn. 432. " [W]hen [an] insurer unreasonably and in bad faith withholds payment of the claim of its insured, it is subject to liability in tort." (Internal quotation marks omitted.) L.F. Pace & Sons, Inc. v. Travelers Indemnity Co., 9 Conn.App. 30, 46, 514 A.2d 766, cert. denied, 201 Conn. 811, 516 A.2d 886 (1986).
In the present case, the plaintiff has pleaded sufficient facts supporting a negligence claim. The complaint alleges the defendant owed a duty of good faith and to treat the plaintiff fairly and reasonably. It further alleges the defendant breached that duty by negligently hiring employees who processed the plaintiff’s claim, failed to timely and properly estimate the plaintiff’s damages, misinterpreted the policy, provided the plaintiff with incorrect information, delayed adjustment of the claim, and created issues when trying to find a basis to deny coverage. The plaintiff also alleges the breach caused the plaintiff’s damages. Taken as true, these allegations show the defendant had a duty to handle the policy with reasonable care and its negligent review of the policy caused the plaintiff harm. See Afifi v. Standard Fire Ins. Co., Superior Court, judicial district of New Haven, Docket No. CV-11-6017083-S, 2011 WL 5307371 (October 21, 2011, Zoarski, J.T.R.). Accordingly, the defendant’s motion to strike count three is denied.
C. Count Four
The defendant lastly moves to strike count four of the plaintiff’s complaint, violations of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110b et seq. (CUTPA), and the Connecticut Unfair Insurance Practices Act, General Statutes § 38a-815 (CUIPA), on the ground that the plaintiff failed to allege a CUIPA claim. The plaintiff responds, arguing it sufficiently pleaded the claim.
CUIPA itself does not provide a cause of action by private litigants. State v. Acordia, Inc., 310 Conn. 1, 31, 73 A.3d 711 (2013). Instead, an action for violation of CUIPA must be brought as a CUTPA claim. Id. Further, " [i]n order to sustain a CUIPA cause of action under CUTPA, a plaintiff must allege conduct that is proscribed by CUIPA." Nazami v. Patrons Mutual Ins. Co., 280 Conn. 619, 625, 910 A.2d 209 (2006). Thus, " if a plaintiff brings a claim pursuant to CUIPA alleging an unfair insurance practice, and the plaintiff further claims that the CUIPA violation constituted a CUTPA violation, the failure of the CUIPA claim is fatal to the CUTPA claim." State v. Acordia, Inc., supra, 310 Conn. 31.
Section § 38a-815 (CUIPA) provides in relevant part: " No person shall engage in this state in any trade practice which is defined in section 38a-816 as ... an unfair method of competition or an unfair or deceptive act or practice in the business of insurance ..." In turn, General Statutes § 38a-816(6) " requires proof that the unfair settlement practices were committed or performed with such frequency as to indicate a general business practice." (Internal quotation marks omitted.) Lees v. Middlesex Ins. Co., 229 Conn. 842, 847-48, 643 A.2d 1282 (1994). " General business practice" has not been defined in the statute or by case law, but the Supreme Court has stated that " General is defined as prevalent, usual [or] widespread ... and practice means [p]erformance or application habitually engaged in ... [or] repeated or customary action." (Internal quotation marks omitted.) Id., 849 n.8. Additionally, such a practice must be " more than a single act of insurance misconduct." Mead v. Burns, 199 Conn. 651, 659, 509 A.2d 11 (1986).
There is another split of authority among Superior Courts as to what factual allegations are sufficient to constitute general business practices. The first line of cases requires sufficient facts to demonstrate acts of insurer misconduct that go beyond the plaintiff’s immediate claim. Under this approach, the plaintiff must plead specific instances where the insurer has committed similar misconduct when handling the claims of other insureds. See, e.g., Williams v. Safeco Ins. Co. of America, Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-12-6016414-S, 2015 WL 7421784 (October 28, 2015, Lee, J.) . The second line of cases does not require the plaintiff to plead instances of misconduct so long as the plaintiff alleges that the insurer misconduct involves other insureds. See, e.g., Kowalchuk v. Travelers Personal Security Ins. Co., Superior Court, judicial district of New Britain, Docket No. CV-11-6012608-S, 2014 WL 3397940 (June 4, 2014, Shortall, J.) .
In the present case, under the first line of cases, the plaintiff has sufficiently pleaded a CUIPA claim. The complaint alleges numerous violations under § 38a-816(6) and goes further than mere conclusory allegations of " general business practices." Rather, the plaintiff lists four cases involving the defendant that, taken as true, show frequent misconduct to indicate a general business practice. Although, it is unclear whether the defendant was found to actually have committed misconduct in those cases, the plaintiff further alleges that agencies in Connecticut and Massachusetts made findings of delay by the defendant. That specific allegation, taken as true, goes above and beyond a mere possibility of misconduct and asserts the defendant actually committed misconduct. In short, the plaintiff sufficiently alleges specific instances of alleged misconduct by the defendant. Accordingly, the defendant’s motion to strike count four is denied.
Because the plaintiff sufficiently pleads a CUIPA claim under the stricter first line of cases, it follows that the plaintiff also sufficiently pleads the claim under the second line of cases.
CONCLUSION
For the foregoing reasons the defendant’s motion to strike is denied in its entirety.