Opinion
No. CV-98-0416692 S
December 22, 2003
MEMORANDUM OF DECISION
The plaintiff, Precision Mechanical Services, Inc., a Connecticut corporation in the general business of plumbing, heating and installation and repair of fire suppression systems, filed an eight-count amended complaint on July 30, 2002, in which four counts are against the defendants, T.J. Pfund Associates, Inc. and Marianne Pfund d/b/a Pfund Associates, Inc., (collectively referred to as "the Pfund"), an insurance agency and brokerage business. Paragraphs one through forty-nine, which are set out at the beginning of the plaintiff's amended complaint in count one, and incorporated by reference in counts two through four, allege the following facts. In September 1995, the plaintiff hired the Pfund to provide, obtain and procure a fifteen-month general liability policy to be in effect from September 25, 1995 through January 1, 1997. In that same month, the Pfund obtained insurance coverage with the defendant, Scottsdale Insurance Company (Scottsdale). The Pfund then hired, on behalf of the plaintiff, a commercial financing company, AFCO Credit Corporation (AFCO) to finance the premiums. A Commercial Premium Finance Agreement was executed on October 25, 1995, between the plaintiff and AFCO for the financing of the general liability policy. The plaintiff began making all requisite policy premium payments and financing payments to AFCO. Even though the Pfund had been able to procure only a policy for twelve months or through September 25, 1996, the plaintiff made the monthly premium financing payments in an amount to satisfy a policy for coverage of fifteen months. The Pfund continued to represent to the plaintiff that the policy was in full force and effect as late as July 19, 1996.
Following a fire at the condominium units on August 9, 1996, where the plaintiff was performing repair services, the plaintiff made a claim under its general liability insurance policy on the same date. The plaintiff also contacted the Pfund on August 9, 1996, to inform it of the incident. On August 10, 1996, the plaintiff was notified by the Pfund that its policy had been canceled on May 23, 1996, at the request and/or direction of AFCO. The plaintiff, however, had not received any notification of the cancellation from AFCO, the Pfund or Scottsdale. Based on the cancellation of the policy, Scottsdale declined to defend or indemnify the plaintiff for the claims arising from the fire.
On June 19, 2003, this court granted AFCO's motion for summary judgment on counts five, six and seven of the plaintiff's amended complaint. This court stated that if the cancellation of the general liability policy by Scottsdale was wrongful, then any action taken by it "subsequent thereto would be a nullity."
Count one sets out a claim in negligence and count two in breach of contract on the ground that the Pfund breached its duty of care as the plaintiff's insurance agent and broker. In count three, the plaintiff alleges that the Pfund engaged in fraudulent conduct and in count four that the Pfund violated the Connecticut Unfair Insurance Practices Act, General Statutes § 38a-815 et seq., (CUIPA) and the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et. seq., (CUTPA).
On March 3, 2002, the Pfund filed a motion for summary judgment accompanied by a memorandum of law with numerous exhibits and documentary evidence. On April 21, 2003, the plaintiff filed a memorandum of law in opposition with supporting exhibits and documentary evidence. Also, on April 21, 2003, the motion was heard on the short calendar.
"Practice Book § 17-49 provides that summary 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 . . . The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law." (Internal quotation marks omitted.) Gould v. Mellick Sexton, 263 Conn. 140, 146, 819 A.2d 216 (2003).
"In ruling on a motion for summary judgment, the court's function is not to decide issues of material fact, but rather to determine whether any such issues exist." Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). "As the party moving for summary judgment, the [movant] is required to support its motion with supporting documentation, including affidavits" Heyman Associates No. 1. v. Insurance Co. of Pennsylvania, CT Page 14520 231 Conn. 756, 796, 653 A.2d 122 (1995). "[T]he party opposing . . . a motion [for summary judgment] must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact." (Internal quotation marks omitted.) Schilberg Integrated Metals Corp. v. Continental Casualty Co., 263 Conn. 245, 252, 819 A.2d 773 (2003). "It is not enough . . . for the opposing party merely to assert the existence of . . . a disputed issue. Mere assertions of fact . . . are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court [in support of a motion for summary judgment]." (Internal quotation marks omitted.) Id., 252-53. "Only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment." (Internal quotation marks omitted.) Great Country Bank v. Pastore, 241 Conn. 423, 436, 696 A.2d 1254 (1997), citing Practice Book § 17-46.
The Pfund moves for summary judgment on counts one and two on the ground that "[a]s an insurance broker, [it] had no duty to advise the plaintiff of the cancellation of the Scottsdale policy and, therefore, plaintiff's negligence claim (count one) and breach of contract claim (count two) fail as a matter of law." In its memorandum of law, the Pfund argues that: (1) although it is undisputed that the Pfund acted as the plaintiff's representative and/or insurance agent in procuring the commercial general liability policy with Scottsdale as requested by the plaintiff, once the policy was procured, the agency relationship between them ended and, therefore, the Pfund had no duty to advise about the cancellation or do anything further on behalf of the plaintiff, (2) the purported cancellation arises out of the contractual relationship between the plaintiff and AFCO, not the plaintiff and the Pfund, and concerns whether AFCO canceled the policy in accordance with General Statutes § 38a-170; and (3) without instruction or direction from the plaintiff, the Pfund was not authorized to procure a substitute policy upon cancellation of the policy.
In opposition, the plaintiff counters that the Pfund is liable for any consequential damages resulting from the wrongful cancellation of the insurance policy. The plaintiff asserts that an insurance broker owes a continuing duty of care to an insured for whom it is hired to obtain an insurance policy. Since the Pfund failed to procure a policy for the requisite fifteen months, the plaintiff argues, it did not accomplish the purpose for which it was hired by the plaintiff and was still working on the plaintiff's behalf on the date of the fire on August 9, 1996, to extend the duration of the policy, and, therefore, the Pfund continued to owe a duty to exercise reasonable skill, care and diligence.
The first two counts turn on the same issue, the duty owed by the Pfund and breach of that duty occasioned by either negligence or the failure to perform a contract. "The existence of a duty is a question of law and only if a duty is found to exist does the trier of fact then determine whether the defendant violated that duty." (Internal quotation marks omitted.) Mendillo v. Board of Education, 246 Conn. 456, 483, 717 A.2d 1177 (1998). "An insurance broker is one who acts as a middleman between the insured and insurer and who solicits insurance from the public under no employment from any special company and who either places an order for insurance with a company selected by the insured, or, in the absence of such selection, with a company the broker selects." (Internal quotation marks omitted.) Lewis v. Michigan Millers Mutual Ins. Co., 154 Conn. 660, 664, 228 A.2d 803 (1967). "While procuring insurance, . . . a broker becomes the agent of that person for that purpose." Id. "As such he owes a duty to his principal to exercise reasonable skill, care, and diligence in effecting the insurance, and any negligence or other breach of duty on his part which defeats the insurance which he undertakes to secure will render him liable to his principal for the resulting loss The principal may sue either for breach of the contract or in tort for breach of duty imposed by it." (Citations omitted.) Ursini v. Goldman, 118 Conn. 554, 559-60, 173 A. 789 (1934). "Once that purpose is accomplished, however, and the insurance is procured, the agency relationship between the insured and the broker terminates, and the broker is without any authority to do anything which further affects the insured unless expressly or impliedly authorized by the insured to do so." Lewis v. Michigan Mutual Ins. Co., supra, 154 Conn. 664.
In the present case, the Pfund, as the plaintiff's broker, had a duty to exercise reasonable care, skill and diligence in procuring a commercial general liability policy for the plaintiff. The Pfund had the responsibility to represent the plaintiff in all dealings to assist in the procurement, preparation and issuance of that policy. To provide the financing for the payment of the insurance premiums to Scottsdale, the Pfund, upon authorization by the plaintiff, obtained and hired AFCO. AFCO and the plaintiff entered into a Commercial Premium Finance Agreement to finance the policy period from September 25, 1995 through January 1, 1997. By its terms, the plaintiff was required to pay nine consecutive monthly installment payments of $449.14 plus a down payment of $1,085 with the first installment due on October 25, 1995. The agreement also provided AFCO with a power of attorney to cancel the policy in the event the plaintiff failed to pay loan installments on the premiums paid by AFCO to Scottsdale. AFCO exercised its authority to cancel the policy for nonpayment of installments and mailed to the plaintiff, as well as the Pfund, notice of cancellation on May 23, 1996. The plaintiff, however, never received any of these notices, and, in fact, had no knowledge of the purported cancellation until it received a fax from the Pfund to that effect on August 10, 1996.
After the finance agreement had been executed between the plaintiff and AFCO, the policy period was altered from fifteen months coverage to twelve months, September 25, 1995 through September 25, 1996. (Docket Item #173, Exhibit E, p. 269-71.)
"Connecticut law does recognize an agency relationship between an insurance [broker] and insured at the time the insurance is contracted and some duties that flow from that relationship. At the very least, the agent has a duty to put into effect the type and amount of coverage requested. It also does not seem too much to ask that an agent, with his or her expertise and knowledge of the insurance business, review existing and available coverages, at that time." Kohn v. John M. Glover Agency, Inc., Superior Court, judicial district of Danbury, Docket No. CV 00 0339053, 29 Conn. L. Rptr. 377 (April 24, 2001, Adams, J.). For example, "in an action against the agent or broker, knowledge of conditions that could invalidate the policy and failing to inform the insured of these conditions is sufficient to hold an agent liable for negligence or breach of contract. The agent's liability on these grounds arises . . . because of his [or her] duty to exercise reasonable care, skill and diligence in effecting the insurance." (Citation omitted; internal quotation marks omitted.) Pinette v. North American Underwriters, Superior Court, judicial district of Litchfield, Docket No. CV 91 0057441 (August 24, 1995, Pickett, J.). "Once having obtained insurance coverage for a customer, and reviewed its terms and conditions with that customer, [however], an insurance . . . broker, is under no obligation to exercise continued monitoring of the customer's practices to ensure that customer's compliance with [the] terms and conditions." Kramer's Inc. v. First Specialty Ins., Superior Court, judicial district of New Haven, Docket No. CV 95 0377403 (June 5, 1998, Downey, J.).
While the plaintiff would like this court to apply a fiduciary duty to the relationship between the Pfund and the plaintiff, the cases in Connecticut, including Godin v. Arthur A. Watson Co., Inc., Superior Court, Judicial district of Hartford, Docket No. CV 99 0585873 (December 5, 2000, Corrigan, J.) on which the Pfund relies, do not hold an agent to that standard of care but rather apply the standard of reasonable skill, care and diligence to an agent. Dimeo v. Burns, Brooks McNeil, Inc., 6 Conn. App. 241, 245, 504 A.2d 557 (1986).
No appellate cases were found in which a broker was deemed to have violated or breached his or her duty of care by failing to have notified the insured of the cancellation of an insurance policy where the cancellation had been initiated by the insurer or a premium financing company. In the present case, the agreement between the Pfund and the plaintiff required the Pfund to procure the general liability insurance requested by the plaintiff, which subsequently remained in effect until canceled for nonpayment by AFCO. After the Pfund had obtained this policy for the plaintiff, the agency relationship between them terminated and the Pfund lacked the authority to provide notice of cancellation of the policy or do anything which would further affect the plaintiff See, e.g., Grant v. City of New Haven, Superior Court, judicial district of New Haven, Docket No. 382068, 21 Conn. L. Rptr. 340 (February 3, 1998, Blue, J.) (citing and quoting 16A J. Appelman J. Appleman, Insurance Law and Practice (1981) §§ 8841, 8843 ("An insurance broker is the agent of the insured in negotiating for a policy . . . It's liability, if any, results from a breach of the duties imposed by that task . . . Once that task has been accomplished, in the absence of a contractual agreement to the contrary, the duties of the broker are ended.")). Upon cancellation of the policy by the insurer, the "failure to notify [the insured] that the company would not continue the policy and that it was canceled [was not] a breach of [the broker's] duty as the [insured's] agent . . . since [the insured] received such notice direct from the company." Rovella v. Standard Accident Insurance Co., 121 Conn. 134, 138, 183 A. 377 (1936).
The Pfund was able to procure a twelve-month general liability policy with Scottsdale. The plaintiff argues that because the Pfund did not obtain a fifteen-month policy, it owed the plaintiff a continuing duty until it was able to provide the plaintiff with an extension of the policy. The overall objective of acquiring a general liability policy, however, was accomplished by the Pfund, and unless the plaintiff specifically authorized the Pfund to do anything further, the Pfund was not under a continuing duty of care. See 16 J. Appleman J. Appleman, supra, § 8829.
By law, General Statutes § 38a-170 imposes on the financing company, and not the broker, a duty of notice of cancellation of a liability insurance policy, where it is the financing company that initiates the cancellation. "The power of attorney . . . is a mechanism created by finance companies and recognized by statute to protect finance companies against insureds who do not meet their financial obligations to keep current with loan installments to finance premiums." Colagoivanni v. Premium Financing Specialists, Inc., Superior Court, judicial district of New Haven, Docket No. CV 95 0370642 (July 22, 1996, Corradino, J.)
Section 38a-170 states:
(a) When an insurance premium finance agreement contains a power of attorney enabling the insurance premium finance company to cancel any insurance contract or contracts listed in the agreement on account of any default on the part of the insured, the insurance contract or contracts shall not be canceled by the insurance premium finance company unless such cancellation is effectuated in accordance with the provisions of this section.
(b) Not less than ten days written notice shall be mailed by first class mail to the insured, at his last known address, of the intent of the insurance premium finance company to cancel the insurance contract unless the default is cured within such ten-day period.
(c) After expiration of such ten-day period, the insurance premium finance company may request, in the name of the insured, cancellation of such insurance contract or contracts by mailing to the insurer a notice of cancellation, and the insurance contract may be canceled as if such notice of cancellation had been submitted by the insured himself but without requiring the return of the insurance contract or contracts. The insurance premium finance company shall also mail, by first class mail, a notice of cancellation to the insured at his last-known address.
(d) All statutory, regulatory, and contractual provisions or restrictions providing that the insurance contract may not be canceled unless notice is given to a governmental agency, mortgagee, or other third party shall apply where cancellation is effected under the provisions of this section. The insurer shall give the prescribed notice in behalf of itself or the insured to any such governmental agency, mortgagee or other third party on or before the second business day after the day it receives the notice of cancellation from the insurance premium finance company and shall determine the effective date of cancellation taking into consideration the number of days notice required to complete the cancellation.
(e) Whenever an insurance contract is canceled in accordance with the provisions of this section, the insurer shall return whatever gross unearned premiums are due under the insurance contract to the insurance premium finance company effecting the cancellation for crediting to the account of the insured. General Statutes § 38a-170.
(f) In the event that the crediting of return premiums to the account of the insured results in a surplus over the amount due from the insured to the insurance premium finance company, such company shall refund such excess to the insured, provided no such refund shall be required if the surplus amounts to less than one dollar.
Unless the plaintiff explicitly or implicitly authorized the Pfund to notify it of cancellation of the policy and to procure a replacement policy, there is no duty owed the plaintiff after the Pfund had obtained the insurance policy. See Lewis v. Michigan Mutual Ins. Co., supra, 154 Conn. 664. The plaintiff contends that following the procurement of the insurance policy the Pfund continued to owe a duty of care because: (1) the Pfund knew that AFCO had canceled the plaintiff's insurance policy but, nonetheless, issued to the plaintiff certificates of insurance as late as July 19, 1996, attesting to the fact that the general liability policy issued by Scottsdale was in full force and effect and (2) the correspondence among the plaintiff, AFCO and N.I.F. with the Pfund indicated it still had the authority to act on behalf of the plaintiff.
N.I.F. Services of New England, Inc. is an insurance broker who assisted in the procurement of the insurance policy with Scottsdale and is no longer a party in this action.
In support thereof, the plaintiff has submitted letters between the Pfund and the plaintiff. In a letter from the plaintiff to the Plund dated March 21, 1996, the plaintiff authorized the Pfund to inform the insurer, Scottsdale, that he had reduced the number of employees to just one and for Scottsdale to adjust the policy premiums to reflect this change. (Docket Item #173, Exhibit E.) In response the Pfund wrote on April 18, 1996, that Scottsdale "will not reduce premium any further as this is not acceptable in their program. In fact, none of our carriers will write any contractors who sub out all the work. They feel the employer/employee relationship is gone and loss exposures are truly increased." (Docket Item # 173, Exhibit E.) In a subsequent letter, regarding the request by the plaintiff for reduced premiums, the Pfund wrote on July 23, 1996: "Enclosed is a check for $744.45 and it is yours! Since the General Liability Policy was written with Scottsdale, I have been attempting to get the policy endorsed to extend 1/1/97 per your request. You paid the extra money in your deposit to AFCO and we have been attempting to get the endorsement done. Now, they tell me that [you] can't endorse from 9/96 to 1/97 and have sent back the additional premium. As I mentioned earlier this year, if you do not continue to have any employees, they will not offer a renewal quotation for September 1996. Their program guidelines do not permit contractors subbing all the work out, etc . . ." (Docket Item #173, Exhibit E.)
These letters authorized the Pfund to inform Scottsdale that a reduction in its premiums is warranted to correspond with a decrease in the number of the plaintiff's employees. This is evidence that for this particular purpose and none other, the plaintiff did direct and authorize the Pfund to act on its behalf.
The plaintiff submitted additional letters between the Pfund and N.I.F. from September 1995 through June 1996, regarding the cost of the liability policy, the extension of the policy from September 1996 through January 1997, the problems with the liability policy as to a mistake in the amount and duration because of change in the payroll and projection of sales, and coverage request for renewal. (Docket Item #173, Exhibit K.) The plaintiff also submitted correspondence between the Pfund and AFCO acknowledging the agreement to provide the financing of the premiums for the plaintiff and AFCO's notice of cancellation of the policy dated May 1996. (Docket Item # 173, Exhibit K.) The letters and correspondence do not show, however, that in the course of business it can be inferred that the plaintiff authorized or directed the Pfund to provide it with notice of cancellation.
The cases relied on by the plaintiff do not impose an obligation of notice on the broker. In Boucher v. Valus, 6 Conn. Cir. Ct. 661, 298 A.2d 238 (1972), the plaintiff was an employee of the defendant corporation which provided its own insurance department to handle the claims and questions about health insurance coverage for the employees. The case held that the defendant supervisor of the insurance department and the corporation "were therefore under a duty to exercise reasonable care and competence "to ascertain the facts on which the statements were based [about coverage]" and "[further,] the defendants were under a duty to exercise reasonable care and competence in communicating the information so that it would be understood by the plaintiffs." Id., 666. Contrary to the relationship between a broker and an insured, which terminates upon the procurement of the insurance coverage, the relationship in Boucher was an ongoing one to answer questions and advise about the type of coverage between the insured and the defendant supervisor. The plaintiff has quoted from Colagoivanni v. Premium Financing Specialists, Inc., Superior Court, judicial district of New Haven, Docket No. CV 95 037 0642 (July 22, 1996, Corradino, J.), for the statement that because the insurance agent "has not shown by affidavit or other documentation to have provided the insured with incorrect information about the cancellation of the policy nor did it do anything to suggest the policy had not been canceled," the insurance agent of the insurer did not violate any standard of care and was not liable for the cancellation of the insured's insurance policy. Based on that language, the plaintiff, in the present case, is saying that the Pfund not only provided the plaintiff with incorrect information about the cancellation, but also affirmatively suggested the policy had not been canceled, and thereby breached the standard of reasonable care owed the plaintiff. Colagoivanni is not, however, a case about a broker and an insured; rather about the agent of the insurance company and whether he or she owed a duty of care to the insured when the financing company canceled the policy. The court held therein that neither the insurer nor its agent are obligated to notify the insured about the cancellation where the premium financing company initiated it for nonpayment by invoking its power of attorney as provided in the agreement between the plaintiff and the financing company. The court in Colagoivanni concluded that these parties had no ongoing agency relationship with the insured, and, therefore, there was no rational reason to impose a duty on the insurer or its agents or to hold either one liable for errors made by financing companies.
In the next case, Capitol Sweeping Services, Inc. v. Superior Ground Maintenance, Superior Court, judicial district of Waterbury, Docket No. CV 95 0128805, 18 Conn. L. Rptr. 676 (January 21, 1997, Vertefeuille, J.) a broker and his employee misinformed the insured about the coverage provided for the sweeper rented from the plaintiff. The court concluded that the broker was liable to the insured for the innocent misrepresentation of its employee regarding the procurement of insurance coverage inasmuch as the broker, who was in the business of procuring insurance coverage, had the means and duty of knowing accurately the extent of the insured's insurance coverage needs. Unlike the present case, however, this mistake or misrepresentation occurred at the time the broker was procuring a policy for the insured prior to the termination of the agency relationship between the broker and the insured.
Lastly, in Nygaard v. Metropolitan Property Casualty Co., Superior Court, judicial district of Stamford/Norwalk at Stamford, Docket No. CV 96 0151924, 19 Conn. L. Rptr. 341 (April 7, 1997, Karazin, J.), the court denied a motion to strike a CUTPA claim on the ground that the plaintiff had alleged all of the essential elements of the claim. This case involved an agent of the insurer who represented to the insured that he had fire coverage when the agent knew or should have known that the insurer had no intention of issuing him a fire policy and failed to advise the insured of this. The court stated that a misrepresentation by an insurance agent to the insured about the coverage he has obtained is a sufficient single act to state a claim under CUTPA. In the present case, the plaintiff posits that based on these cases a broker has a continuous duty of care that includes informing the insured of the cancellation of a liability policy and upon cancellation taking all the necessary steps to procure a replacement policy, notwithstanding the financing company's obligation under § 38a-170 to notify the insured of any cancellation.
The law, however, does not impose on a broker the duty to notify of the cancellation where the premium financing company has canceled the policy for nonpayment and the insured has neither implicitly or explicitly directed or authorized the broker to provide it with such notice. "If . . . a broker is employed to procure insurance, his authority ceases upon procuring the insurance and after the policy is delivered. The [broker] is not, under that rule, the agent of the insured for the purpose of receiving notice of the company's desire to cancel a policy." 16 J. Appleman J. Appleman, Insurance Law and Practice (1981) § 8729, p. 306-07. A broker does not become the agent of the insured for the purpose of accepting a cancellation of the policy by the mere fact that he acted as the agent of the insured in procuring the insurance. 16A J. Appleman J. Appleman, supra, § 8844. A broker must have the authority to accept the cancellation notice and there is no liability on the part of the broker for failing to notify the insured of the cancellation where the insured either knew or should have known from other sources that the policy had been canceled. 43 Am.Jur.2d, Insurance § 168 (2003).
While it may have been desirable for the Pfund to have furnished the plaintiff with such notice, neither the law, nor the agreement between the broker and the plaintiff to provide insurance coverage or any actions by the plaintiff compelled it to do so. As a matter of law, there was no duty owed the plaintiff by the Pfund to have provided it with a notice of cancellation of the policy, and, therefore, summary judgment for the Pfund will enter as to counts one and two.
The Pfund moves for summary judgment on count three on the ground that the "[p]laintiff has failed to present any facts demonstrating fraudulent conduct on the part of [the] Pfund, and the claim for fraud . . . is nothing more than a diversion by [the] plaintiff from the main issue in this case, i.e., whether the Scottsdale policy was properly canceled by AFCO in accordance with . . . § 38a-170." The Pfund argues that pursuant to General Statutes § 38a-167 the change of the effective date of the liability policy from September 25, 1995 through January 1, 1997, to September 25, 1995 through September 25, 1996, is not a material alteration in the agreement between AFCO and the plaintiff.
Section 38a-167 states in relevant part:
(a) Every insurance premium finance agreement shall (1) be dated, signed by or on behalf of the insured, and the printed portion thereof shall be in at least eight-point type; (2) contain the name and place of business of the insurance agent negotiating the related insurance contract, the name and address or the place of business of the insurance premium finance company to which payments are to be made, a description of the insurance contracts involved and the amount of the premium therefor; and (3) set forth the following information when applicable: (A) The total amount of the premiums, (B) the amount of the downpayment, (C) the principal balance (being the difference between the total amount of the premiums and the amount of the downpayment), (D) the amount of the service charge, (E) the balance payable by the insured (being the sum of the principal balance and the amount of the service charge), and (F) the number of installments required, the amount of each such installment expressed in dollars and the due date or period thereof.
General Statutes § 38a-167.
The agreement between the plaintiff and AFCO, signed by the plaintiff on October 25, 1995, and submitted as evidence by both the plaintiff and the Pfund, states that the insurance policy was to be in effect from September 25, 1995 through January 1, 1997. At some point, the policy period was changed on the finance agreement to reflect coverage from September 25, 1995 through September 25, 1996, and the plaintiff contends that the signature of its president was added thereto. The plaintiffs' president testified that the Pfund explained to him as early as December 1995 that the policy period was altered to cover September 25, 1995 through September 25, 1996. (Docket Item #173, Exhibit E, pp. 269-71.) Installment payments were made by the plaintiff as required through April 1996.
In its motion for summary judgment on count three, the Pfund is addressing the legal sufficiency of that claim. The appellate courts in Connecticut have stated that a motion for summary judgment is a proper way to test the legal sufficiency of the complaint. Boucher Agency, Inc. v. Zimmer, 160 Conn. 404, 409, 279 A.2d 540 (1971); Drahan v. Board of Education, 42 Conn. App. 480, 498 n. 17, 680 A.2d 316, cert. denied, 239 Conn. 921, 682 A.2d 1000 (1996). "To be entitled to summary judgment, however, the movant must show what the material facts are, that there is no genuine dispute as to those facts, and that under those facts the movant is entitled to judgment as a matter of law." Arnone v. Connecticut Light Power, Superior Court, Complex litigation docket at Waterbury, Docket No. X01 CV98 0168276 (March 22, 2002, Hodgson, J.) ( 32 Conn. L. Rptr. 58).
The contents of a premium finance agreement are governed by § 38a-167. In the present case, the agreement, in addition to being signed and dated, includes: the name and place of business of the insurance agent negotiating the insurance contract (the Pfund); name and address of the insurance premium finance company to which payments are made AFCO); a description of the insurance contracts involved (policy issued by Scottsdale); the amount of the premium for the policy ($4,597); the total amount of the premiums ($4878.08); amount of the down payment ($1085); the principal balance being financed ($3,793.08): finance charge ($249.18); total payments payable ($4,042.26); number of installments required (9); amount of each installment ($449.14); and the due date or period for the first installment (October 25, 1995). The agreement is in accord with the requirements of the statute and the plaintiff complied with them and made payments to AFCO up and until April 16, 1996.
The plaintiff argues that the Pfund either forged the plaintiff's signature or knowingly permitted it to be forged and "it was pursuant to this forged document that AFCO purportedly requested and directed the cancellation of the [the] liability policy." "The elements of a fraud action are: (1) a false representation was made as a statement of fact; (2) the statement was untrue and known to be so by its maker; (3) the statement was made with the intent of inducing reliance thereon; and (4) the other party relied on the statement to his detriment." (Internal quotation marks omitted.) Weinstein v. Weinstein, 79 Conn. App. 638, 642, 830 A.2d 1134 (2003). The plaintiff has submitted no facts to support its allegation that the forged document was the basis for the wrongful cancellation and the failure of the Pfund to have provided the plaintiff with notice of cancellation. Where the plaintiff paid premiums to AFCO until April 1996 and was aware that the coverage period of the policy was for twelve, and not fifteen months, the conclusion that the "forged" agreement between the plaintiff and AFCO that resulted in the cancellation of the insurance policy with Scottsdale is not supported by the facts. The plaintiff has not alleged sufficient facts to support a claim for fraud. As to count three, therefore, summary judgment is granted as a matter of law.
The Pfund moves for summary judgment on count four on the grounds that the plaintiff's CUTPA claim is legally inadequate inasmuch as the Pfund cannot be held liable under CUTPA for a claim sounding in professional negligence and the plaintiff has failed to set forth any facts demonstrating that the Pfund violated CUIPA, a necessary predicate to finding liability under CUTPA for insurance-related practices. In its memorandum in opposition to the motion for summary judgment, the plaintiff argues that although a motion to strike, and not one for summary judgment, is the correct procedure to challenge the legal sufficiency of a complaint, the CUTPA claim, alleging negligence, breach of an agreement, fraud and violations of CUTPA is legally sufficient.
This court has previously noted in its discussion of count three that a motion for summary judgment may be used to test the legal sufficiency of the complaint.
To prevail under CUTPA, a party must plead sufficient allegations of the statute. General Statutes § 42-110b(a) provides: "No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." "It is well settled that in determining whether a practice violates CUTPA [our courts] have adopted the criteria set out in the `cigarette rule' by the federal trade commission for determining when a practice is unfair: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — whether, in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers [competitors or other businessmen] . . . All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three." (Internal quotation marks omitted.) Fink v. Golenbock, 238 Conn. 183, 215, 680 A.2d 1243 (1996).
In count four, the plaintiff incorporated counts one through fifty-two (negligence, breach of contract and fraud claims) and further alleged that, "[t]he . . . Pfund engaged in fraudulent conduct by either forging or knowingly permitting the plaintiff's president's signature to be forged on the Commercial Finance Agreement; [t]he course of conduct engaged in by the . . . Pfund . . . constitutes unfair and deceptive acts or practices in violation of [CUIPA] . . . [§] 38a-816 et seq. and in particular constitutes a violation of . . . 38a-816(1) and . . . 38a-816(8); [a]s a direct and proximate result of the . . . Pfund's unfair and/or deceptive acts or practices, the plaintiff has sustained damages . . . and . . . has incurred and will continue to incur reasonable attorneys fees and costs; [and] [t]he course of conduct engaged in by the . . . Pfund . . . constitutes unfair and deceptive acts or practices in violation of [CUTPA]."
Since summary judgment has been granted on the negligence, breach of contract and fraud claims in counts one through three, this court will address only the CUTPA violations alleged by the plaintiff on the grounds of professional negligence and CUIPA.
"An allegation of a violation of CUIPA alone is not enough to maintain a private right of action for unfair insurance practices. CUIPA forbids any person engaged in the business of insurance in the state of Connecticut from engaging in any unfair or deceptive act or practice prohibited by the statute. General Statutes § 38a-815." Lefebvre v. Tracy Driscoll Co., Superior Court, judicial district of New Britain, Docket No. CV 02 0517796 (May 6, 2003, Cohn, J.). "CUTPA authorizes private causes of action to enforce a claim derived from CUIPA." Id. "Therefore, CUTPA can be used to maintain a private right of action if the allegation incorporates a CUIPA prohibition and meets the standard of a fraudulent practice and intentional misrepresentations." Id. A plaintiff complaining of unfair insurance practices is entitled to maintain a private right of action under CUTPA for alleged unfair trade practices. See Griswold v. Union Labor Life Ins. Co., 186 Conn. 507, 519-21, 442 A.2d 920 (1982). The Supreme Court has held that a party may obtain relief for a violation of CUIPA by bringing a CUTPA action for an insurance practice alleging the CUIPA violation. Mead v. Burns, 199 Conn. 651, 663-66, 509 A.2d 11 (1986).
In addition to alleging a violation of CUIPA as a predicate to the CUTPA claim in count four, the plaintiff alleges professional negligence as a violation of CUTPA. In determining CUTPA issues, our Supreme Court has declined to hold that "every provision of CUTPA permits regulation of every aspect of the practice of law" and has stated that "only the entrepreneurial aspects of the practice of law are covered by CUTPA." (Internal quotation marks omitted.) Suffield Development Associates Ltd Partnership v. National Loan Investors L.P., 260 Conn. 766, 781, 802 A.2d 44 (2002). "[A] number of Superior Court judges have held that the CUTPA exclusion for professional negligence extends to professions other than law and medicine." 1049 Asylum L.P. v. Kinney Pike Ins., Superior Court, judicial district of Hartford, Docket No. CV 02 0816344, 34 Conn. L. Rptr. 723 (May 30, 2003, Booth J.); see also Finkelday v. Newcomb, Superior Court, judicial district of Middlesex, Docket No. CV 980084847 (September 21, 1999, Gordon, J.) (professional negligence claim against insurance agents does not give rise to a CUTPA claim.) The plaintiff's claim based on professional negligence, therefore, is legally insufficient.
To determine whether the Pfund violated CUIPA, the Pfund's conduct must be in violation of General Statutes § 38a-816. Section 38a-816 defines acts that are "unfair methods of competition and unfair and deceptive acts or practices in the business of insurance." Subsection (1) states that: "Misrepresentations . . . of insurance polices [is the m]aking 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" and "(8) Misrepresentation in insurance applications [is] [m]aking false or fraudulent statements or representations on or relative to an application for an insurance policy for the purpose of obtaining a fee, commission, money or other benefit from any insurer, producer or individual."
In support of its CUIPA claim, the plaintiff argues, that during the spring and summer of 1996 by way of oral conversations and written correspondence, the Pfund misrepresented to the plaintiff that its general liability insurance policy issued by Scottsdale was in full force and effect, when the Pfund knew it had been canceled. The plaintiff further argues that the Pfund stated orally and in writing that it had procured and obtained a general liability insurance coverage which would be in effect from September 25, 1995 through January 1, 1997, when it knew that the effective dates of the policy was for a duration of twelve and not, fifteen months. The plaintiff claims, without much analysis, that these allegations amount to a misrepresentation of benefits, advantages, conditions and terms of an insurance policy in violation of §§ 38a-816(1) and (8) of CUIPA.
"[T]he plain language of the statute, [ 38a-816] permits recovery only if an insured establishes that its insurer made a purposeful misrepresentation. To show a purposeful misrepresentation, an insured must necessarily produce evidence that the insurer acted intentionally." (Emphasis in original.) Lefebvre v. Tracy Driscoll Co, supra, Superior Court, Docket No. CV 02 0517796. The conduct alleged by the plaintiff relates to the premium financing agreement between the plaintiff and AFCO. There is no evidence that any intentional or purposeful misrepresentations were made by the Pfund relative to an application for an insurance policy for the purpose of obtaining a commission, fee, money or other benefit from an insurer to set forth a violation of § 38a-816(8). There is also no evidence that the Pfund made misrepresentations in or engaged in false advertising of insurance policies in violation of § 38a-816(1). See Heyman Associates No. 1 v. Insurance Co. of Penn., 231 Conn. 756, 796, 653 A.2d 122 (1995). The plaintiff has failed to allege a viable CUIPA claim. Absent a CUIPA claim, the plaintiff cannot prevail under CUTPA.
The evidence submitted by the parties shows the absence of any material fact in dispute, and, therefore, as a matter of law, the Pfund's motion for summary judgment on counts one through four is granted.
GILARDI, JUDGE.