Opinion
No. CV 09 5011546S
December 10, 2009
MEMORANDUM OF DECISION ON DEFENDANT'S MOTION TO STRIKE, #115
This matter is before the court concerning the defendant's motion to strike the second count as well as prayers for relief b, c, and d of the plaintiff's revised complaint, dated May 18, 2009. After considering the parties' written submissions and oral arguments, the court issues this memorandum of decision.
I FACTS
On February 18, 2009, the plaintiff filed a three-count complaint against the defendant, Encompass Indemnity Company (Encompass), claiming breach of contract, (count one); breach of covenant of good faith and fair dealing (count two); and negligence (count three). The complaint was thereafter revised on May 18, 2009.
Encompass issued a homeowner's insurance policy to the plaintiff, for the coverage policy period of February 21, 2006 through February 21, 2007. On January 8, 2007, the plaintiff's home located at 48 Buell Street, New Britain, Connecticut, was destroyed by a fire. At the time of the fire, the plaintiff had a mortgage on the home. The loss was a covered loss under the policy, and at no time did Encompass deny coverage for the loss, or for any part of it, but has instead accepted coverage and proceeded to handle and adjust the claim. Encompass paid for the demolition of the property as required by the city of New Britain, paid for alternate living expenses, and made payments to the plaintiff for the actual cash value of the property so as to allow her to pay off the mortgage holder to whom she was indebted.
In pertinent part, the policy, as amended, provides:
REAL PROPERTY — LIMIT OF LIABILITY CT Page 932
Covered Losses are settled on a replacement cost basis (without deduction for depreciation), subject to the following:
* * *
If the replacement premises is not at the same location, we will pay no more than the least of the following amounts:
a. The dwelling replacement value shown in the Coverage Summary, or
b. The replacement cost of that part of the building damaged for like construction and use on one same premises.
Rather than rebuild at the same location, the plaintiff chose to purchase a new home elsewhere, a contingency which was provided for in the policy. She understood that she would have less coverage available under the applicable terms of the policy regarding replacement of a destroyed dwelling; nonetheless, she made the decision to purchase a home elsewhere and was informed by Encompass though its adjuster, the total amount of replacement cost coverage available to her for this purchase was $442,100.
The parties are in dispute concerning the terms of the policy and the amount available to the plaintiff should she choose to purchase a home elsewhere, resulting in this lawsuit. The plaintiff alleges, in count one, that Encompass is liable to her for breach of contract in that it: (a) relied upon the wrong policy provisions, (b) ignored the correct policy provisions, (c) refused to afford the plaintiff the proper amount of coverage due, (d) changed its position after causing the plaintiff to rely to her detriment on its representations, and (f) otherwise failed to properly and timely handle her claim. In addition, she alleges further damages resulting in the foregoing breaches by Encompass.
In count two of the revised complaint, the plaintiff incorporates all of the allegations of her breach of contract claim, and then states, that the defendant's actions "as stated above in paragraph 12-20 [from the breach of contract claim] were undertaken in bad faith, in that they were conducted willfully, with ill will, evil motive, furtive design, and/or moral obliquity . . ." She alleges, more particularly, that the defendant misrepresented the amount of coverage and policy provision available, changed its position, delayed and failed to accurately handle her claim. As to the breach of contract claim (count one), the plaintiff is seeking prejudgment interest under General Statutes § 37-3a. Prayer for Relief ¶ c. As to the breach of the covenant of good faith and fair dealing (count two), the plaintiff is seeking common-law punitive damages, that is, attorneys fees and litigation expenses. Prayers for Relief ¶¶ b and d. The plaintiff's claimed losses include, but are not limited to, the full amount of coverage due, additional living expenses, deposit monies, lost income tax deductions, deprival of building equity in a new home, lost opportunities to purchase a new home at advantageous prices, loss of use of contents of house, and loss of opportunity to replace contents. (Revised complaint ¶ 21.) The defendant seeks to strike count two and prayers for relief, b, c, and d.
II DISCUSSION
"Whenever any party wishes to contest (1) the legal sufficiency of the allegations of any complaint, counterclaim or cross claim, or of any one or more counts thereof to state a claim upon which relief can be granted . . . that party may do so by filing a motion to strike the contested pleading or part thereof." Practice Book § 10-39(a). "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.) Peter-Michael, Inc. v. Sea Shell Associates, 244 Conn. 269, 270, 709 A.2d 558 (1998). "In ruling on a motion to strike, the court is limited to the facts alleged in the complaint." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). The court must "construe the complaint in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) Eskin v. Castiglia, 253 Conn. 516, 523, 753 A.2d 927 (2000). "A motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Emphasis in original; internal quotation marks omitted.) Faulkner v. United Technologies Corp., supra, 240 Conn. 588. In deciding a motion to strike, "the role of the trial court [is] to examine the [complaint], construed in favor of the plaintiffs, to determine whether the [pleading party has] stated a legally sufficient cause of action." (Internal quotation marks omitted.) Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378, 698 A.2d 859 (1997).
Covenant of Good Faith and Fair Dealing
Count two of the plaintiff's revised complaint alleges that the defendant breached the covenant of good faith and fair dealing in one or more of the following ways:
a. Misrepresenting the amount of coverage available to the plaintiff's claim;
b. Misrepresenting which policy provisions apply to the plaintiff's claim;
c. First representing to the plaintiff that it would afford her the full amount of coverage due, and then changing its position after having induced the plaintiff to accept the lesser amount of coverage available under the policy;
d. Delaying and withholding payment so as to have the benefit of holding monies reserved on the plaintiff's claim and receiving interest on them;
e. Failing to accurately and timely communicate with the plaintiff;
f. Failing to timely and accurately handle her claim for benefits.
The defendant moves to strike this count on the ground that it fails to allege the requisite "bad faith" to support such a claim.
"Every contract carries an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement. Habetz v. Condon, 224 Conn. 231, 238, 618 A.2d 501 (1992). Bad faith means more than mere negligence; it involves a dishonest purpose. Id., 237." (Internal quotation marks omitted.) Gupta v. New Britain Hospital, 239 Conn. 574, 598, 687 A.2d 111 (1996). "Bad faith in general implies both 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." (Citation omitted; internal quotation marks omitted.) Habetz, supra, 224 Conn. 237. Bad faith implies "a design to mislead or to deceive another . . . the conscious doing of a wrong because of dishonest purpose or moral obliquity." (Internal quotation marks omitted.) Buckman v. People Express, Inc., 205 Conn. 166, 171, 530 A.2d 596 (1987).
The implied covenant of good faith and fair dealing is applicable to contracts of insurance. Verrastro v. Middlesex Ins. Co., 207 Conn. 179, 190, 540 A.2d 693 (1988); Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 566, 479 A.2d 781 (1984); Hoyt v. Factory Mutual Liberty Ins. Co., 120 Conn. 156, 159, 179 A. 842 (1935).
"A mere conclusory allegation of bad faith unsupported by any factual allegations, is insufficient to sustain a claim of bad faith . . . Thus, a claim for breach of the implied covenant of good faith and fair dealing is not legally sufficient unless a dishonest purpose or sinister motive is alleged." (Citations omitted; internal quotation marks omitted.) Wolverine Fire Protection Co. v. Tougher Industries, Superior Court, judicial district of Hartford, Docket No. CV 01 0805554 (June 20, 2001) [ 29 Conn. L. Rptr. 731]. In other words, "[i]n order to survive a motion to strike, a plaintiff's claim of bad faith must be alleged in terms of . . . acts done with a bad motive or with reckless indifference to the interest of others." (Internal quotation marks omitted.) Brouillard v. United Illuminating Co., Superior Court, judicial district of New Haven, Docket No. CV 98 0418595 (June 1, 1999).
In reviewing count two of the plaintiff's revised complaint to determine whether the facts alleged state a cause of action for breach of the covenant of good faith and fair dealing, there are no claims that the defendant acted in bad faith or with an improper or dishonest motive in failing to pay the plaintiff's claim. The alleged misrepresentations of the amount of coverage, the applicable policy provisions, the change in position of the amount due and payable, the failure to act with reasonable promptness, and the failure to timely and accurately handle her claim for benefits are simply claims that the defendant did not properly handle the plaintiff's claim for benefits under the policy. "These allegations are unsupported by facts that the defendant's conduct was intentional dishonest or morally oblique or sinister as required under the relevant case law." Fedora v. Worcester Ins. Co., judicial district of New Haven, Docket No. CV 03 0285288 (September 28, 2004). On the contrary, the defendant's alleged admissions as noted in the plaintiff's revised complaint would indicate that the defendant's conduct was anything but dishonest or sinister. (Plaintiff's revised complaint ¶ 19.)
In letters from the adjuster to the plaintiff, he stated, ". . . I know I probably did not mention the deduction of the land value as it did not occur to me and again I never had something like this before." "It is possible because of this unique situation to me I did not adequately explain how it would work." "I am sorry this took so long." "P.S. I am learning a lot handling this claim which goes to show your [sic] never too old to learn."
The motion to strike count two of the complaint is granted. The corollary prayers for relief seeking common-law punitive damages and attorneys fees and litigation expenses, prayers for relief b and d are also stricken.
Prayer for Relief Paragraph c — Prejudgment interest
The plaintiff in her prayers for relief is seeking to recover interest pursuant to General Statutes § 37-3a, which provides that interest at a rate of ten percent a year may be recovered and allowed in civil actions. Encompass moves to strike this prayer for relief on the ground that it cannot be legally awarded in the present case, as the plaintiff is not seeking a liquidated amount but rather an unspecific amount due for "coverage due" in addition to claimed consequential losses. In such situations, prejudgment interest is not recoverable because the "money" is not due and payable unless and until the plaintiff is successful in obtaining a judgment in her favor.
General Statutes § 37-3a states, in relevant part: "Except as provided in sections 37-3b, 37-3c, and 52-192a, interest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions or arbitration proceedings under chapter 909, including actions to recover money at a greater rate, as damages for the detention of money after it becomes payable."
"[P]rejudgment interest is awarded in the discretion of the trial court to compensate the prevailing party for a delay in obtaining money that rightfully belongs to him . . . The detention of the money must be determined to have been wrongful. The party seeking prejudgment interest has the burden of demonstrating that the retention of money is wrongful, and this requires more than demonstrating that the opposing party detained money when it should not have done so." (Internal quotation marks omitted.) Travelers Property Casulaty Co. v. Christie, 99 Conn.App. 747, 763, 916 A.2d 114 (2007).
In Foley v. Huntington Co., 42 Conn.App. 712, 739, 682 A.2d 1026, cert. denied, 239 Conn. 931, 683 A.2d 297 (1996), the court noted that "section 37-3a provides a substantive right that applies only to certain claims." "Prejudgment interest . . . has been applied to breach of contract claims for liquidated damages, namely, where a party claims that a specified sum under the terms of a contract, or a sum to be determined by the terms of the contract, owed to that party has been detained by another party." Id., 740. "[R]equests for prejudgment interest in personal injury claims to not typically constitute a claim for the wrongful detention of money before the rendering of judgment . . ." Id., 741. "The reasons for this limitation were that in personal injury claims, damages are typically uncertain, the purpose of the damages is to restore the injured to the status they had prior to the negligent act, and such claims to do not seek to regain money detained by another." Travelers Property Casualty Co. v. Christie, supra, 99 Conn.App. 764.
The first inquiry in determining whether an award of prejudgment interest is allowable centers around whether there has been a delay in obtaining money that rightfully belongs to the plaintiff, whether the money was wrongfully withheld. In the present case, the plaintiff has made a claim in her revised complaint which alleges a wrongful detention of money by Encompass. Although she is also claiming other consequential losses in addition to her claim that money was wrongfully withheld, the equitable determination would lie within the trier's sound discretion. See, Maloney v. PCRE, LLC, 68 Conn.App. 727, 755, 793 A.2d 1118 (2002). Therefore, the motion to strike the prayer for relief pursuant to General Statutes § 37-3a is denied.
III CONCLUSION
The plaintiff's motion to strike is granted as to count two, as well as prayers for relief b and d. However, the motion to strike is denied as to the prayer for relief c seeking prejudgment interest.