2005 Ct. Sup. 13355-ak
No. CV 02 0816344Connecticut Superior Court Judicial District of Hartford at Hartford
October 26, 2005
MEMORANDUM OF DECISION RE PEERLESS INSURANCE COMPANY’S MOTION FOR PARTIAL SUMMARY JUDGMENT #171
LOIS TANZER, JUDGE.
On June 26, 2003, the plaintiff, 1049 Asylum Limited Partnership (1049 Asylum), filed an eleven-count complaint against the defendant Peerless Insurance Company (Peerless) and two co-defendants. The complaint alleges in part negligent misrepresentation, breach of contract, breach of good faith and fair dealing, and violations of the Connecticut Unfair Trade Practices Act (CUTPA) and the Connecticut Unfair Insurance Practices Act (CUIPA). The complaint arises out of an insurance claim that followed damage to 1049 Asylum’s commercial property. 1049 Asylum alleges that Peerless, the insurance company that provided the policy covering the property, represented falsely that the policy was adequate and consistent with what was requested; represented falsely the calculations to be used in determining the policy’s coinsurance requirement; and breached its contract with 1049 Asylum by calculating that requirement wrongly and failing to pay the full amount of the loss. 1049 Asylum further alleges that Peerless’ conduct amounts to violations of General Statutes §§ 38a-815 and 38a-816(1)(a) (CUIPA) and § 42-110a et seq. (CUTPA).
On March 30, 2005, Peerless filed a motion for partial summary judgment accompanied by a memorandum of law. In support of the motion, Peerless submitted deposition testimony of Bukk Carleton, a representative of 1049 Asylum, as well as a number of other exhibits. On June 10, 2005, 1049 Asylum filed an objection to Peerless’ motion for partial summary judgment accompanied by a memorandum of law. In support of the objection, 1049 submitted deposition testimony and a number of other exhibits.
The following facts are undisputed. Prior to July 28, 2000, a representative for 1049 Asylum contacted Kinney Pike for help in CT Page 13355-al procuring an insurance policy for a building the partnership was preparing to purchase in Hartford, Connecticut. This representative had done business with Kinney Pike for several years. Kinney Pike obtained an insurance binder from Peerless Insurance Company with an effective date of July 31, 2000, with a coverage limit of $5 million. At 1049 Asylum’s request, that limit was lowered to $2.5 million and a new binder was issued. Kinney Pike warned 1049 Asylum’s representatives of the risks of lowering the limit on the policy. On December 28, 2000, a burst pipe in the building flooded the basement, resulting in significant damage. A claim was submitted to Peerless for the loss.
Peerless adjusted the loss, and determined that the value of the building was $7.488 million. Concluding that the building was underinsured, Peerless assessed a 37% coinsurance penalty to the damage calculations. They then issued payments to 1049 Asylum in the amount of $39,382.32. A final payment of $18,681.72, which came with a stipulation that acceptance of the payment would constitute a full resolution of the claim, was not cashed or deposited by 1049 Asylum, which then commenced the present action.
“Summary judgment is a method of resolving litigation when 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 . . . The motion for summary judgment is designed to eliminate the delay and expense of litigating an issue when there is no real issue to be tried.” (Citations omitted.) Wilson v. New Haven, 213 Conn. 277, 279, 567 A.2d 829 (1989).
“However, since litigants ordinarily have a constitutional right to have issues of fact decided by a jury . . . the moving party for summary judgment is held to a strict standard . . . of demonstrating his entitlement to summary judgment.” (Citation omitted; internal quotation marks omitted.) Kakadelis v. DeFabritis, 191 Conn. 276, 282, 464 A.2d 57
(1983). “In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact. The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law.” (Internal quotation marks omitted.)Martel v. Metropolitan District Commission, 275 Conn. 38, 46 (2005). “Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue.” (Internal quotation marks omitted.) Martel v. Metropolitan CT Page 13355-am District Commission, supra, 275 Conn. 46-47.
“[T]he `genuine issue’ aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred . . . A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case.” (Citation omitted; internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).
“A genuine issue has been variously described as a triable, substantial or real issue of fact . . . and has been defined as one which can be maintained by substantial evidence.” (Citation omitted; internal quotation marks omitted.) United Oil Co. v. Urban Developnent Commission, 158 Conn. 364, 378, 260 A.2d 596 (1969). “`Issue of fact’ encompasses not only evidentiary facts in issue but also questions as to how the trier would characterize such evidentiary facts and what inferences and conclusions it would draw from them.” United Oil Co. v. Urban Development Commission, 158 Conn. 364, 379, 260 A.2d 596 (1969). “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
Peerless argues that it is entitled to partial summary judgment on the grounds that 1049 Asylum has failed to allege and prove that Peerless breach its implied duty of good faith and fair dealing. “To prove a claim for bad faith under Connecticut law, the plaintiffs [are] required to prove that the defendants engaged in conduct design[ed] to mislead or to deceive . . . 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 . . . [B]ad faith is not simply bad judgment or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity . . . it contemplates a state of mind affirmatively operating with furtive design or ill will . . . Moreover, [b]ad faith is an indefinite term that contemplates a state of mind affirmatively operating with some design or motive of interest or ill will.” (Internal quotation marks omitted.) Elm Street Builders, Inc. v. Enterprise Park Condominium Ass’n., Inc., 63 Conn.App. 657, 667-68, 778 A.2d 237 (2001). “[T]he existence of a contract between the parties is a necessary antecedent to any claim of breach of the duty of good faith and fair dealing.” Hoskins v. Titan Value Equities Group, Inc., 252 Conn. 789, 793, 749 A.2d 1144 (2000). CT Page 13355-an
In deposition testimony, it was revealed that Peerless was offering “bonus commissions” for the sale of new policies out of its Inland Marine division in order to boost slow sales. 1049 Asylum alleges that its insurance agent, Kinney Pike, failed to procure the specific coverage requested by 1049 Asylum, choosing instead to procure so-called “Builder’s Risk” coverage through the Inland Marine division, resulting in a bonus commission for itself. 1049 Asylum further alleges that it was damaged by this conduct because the coverage under the “Builder’s Risk” policy was inadequate. At the time that Peerless offered the policies through its Inland Marine division, however, no contract existed between it and 1049 Asylum. It was merely making these policies available to Kinney Pike, which chose to offer such a policy to 1049 Asylum. Evidence of “bonus commissions” for the sale of such policies fails to set a factual predicate for a bad faith claim.
1049 Asylum further alleges that Peerless acted in bad faith by suspecting 1049 Asylum of fraud, thereby delaying payment of the claim, and improperly calculating the final value of the property based on an 80% occupancy rate. However, no evidence is presented that Peerless, in investigating a claim for the existence of fraud or in calculating the final value of the building based on completed renovations and 80% occupancy rate, was motivated by a dishonest purpose or sinister motive.
Peerless further moves for partial summary judgment on the grounds that 1049 has failed to allege and prove that Peerless violated either CUIPA or CUTPA. First, Peerless argues that 1049 Asylum is not entitled to recover under CUIPA because the statute does not provide for a private cause of action. The Supreme Court has not yet officially recognized a private cause of action under CUIPA. However, the majority of Superior Courts hold that “there is no express authority under CUIPA for a private cause of action.” See Selle v. Geico General Insurance, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 04 4000567 (March 29, 2005, Tanzer, J.). Therefore, as a matter of law, this count cannot stand on its own.
Second, Peerless argues that 1049 Asylum has failed to allege a business pattern or practice sufficient upon which to recover under CUIPA. This argument refers to § 38a-316(6) of CUIPA, which requires that unfair claim settlement practices occur as part of a general business pattern or practice. However, 1049’s complaint alleges violations of CUIPA based on §§ 38a-315 and 38a-816(1)(a), the latter of which defines unfair and deceptive acts as including an act that “[m]isrepresents the benefits, advantages, conditions or terms of any insurance policy . . .” Because this particular claim does not require a showing of a general business pattern or practice, Peerless’ argument fails. CT Page 13355-ao
Next, Peerless argues that, because there is insufficient evidence to support a violation of CUIPA, 1049 Asylum cannot recover on a claim of CUTPA based on CUIPA. “Although the CUIPA violations alleged by the plaintiff cannot stand on their own, CUTPA authorizes a private cause of action to enforce claims derived from CUIPA.” Selle v. Geico Insurance, supra, Superior Court, Docket No. CV 04 4000567. The Supreme Court observed in Lees v. Middlesex Ins. Co., 219 Conn. 644, 654, 594 A.2d 952
(1991), that “a private cause of action exists under CUTPA to enforce alleged CUIPA violations.” In the complaint, paragraphs one through thirty-eight of the seventh count (the CUIPA claim) are incorporated as allegations under the eighth count (the CUTPA claim). “Under Lees v. Middlesex, the CUIPA allegations brought by the plaintiff under the CUTPA claim provides the means by which a private cause of action against the defendant for the alleged CUIPA violations can be maintained.” Fedora v. Worchester Insurance Co., Superior Court, judicial district of New Haven at Meriden, Docket No. CV 03 0285288 (September 28, 2004, Tanzer, J.).
Based on the foregoing, the defendant Peerless’s motion for partial summary judgment is granted for counts six (breach of implied duty of good faith and fair dealing) and seven (the CUIPA claim), and denied for count eight (the CUTPA claim).
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