AA HOMES, LLC v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY ET AL.

2005 Ct. Sup. 16193
No. CV05 4002025-SConnecticut Superior Court Judicial District of New Haven at Meriden
December 12, 2005

[EDITOR’S NOTE: This case is unpublished as indicated by the issuing court.]

MEMORANDUM OF DECISION RE MOTION TO STRIKE # 115
PETER E. WIESE, JUDGE.

I PROCEDURAL HISTORY
This action, arises out of a blanket insurance coverage contract between a construction company and an insurance company and its agents. On January 24, 2005, the plaintiff, AA Homes, LLC, filed a nine-count complaint against the defendants, Nationwide Mutual Fire Insurance Company (Nationwide), Koziura Insurance Agency and its owner, Wieslaw Koziura.

The plaintiff alleges the following facts in the complaint. The plaintiff purchased a blanket coverage insurance policy from Nationwide. In 1994, one of the plaintiff’s subcontractors was seriously injured in a fall and brought a negligence action against the plaintiff. The plaintiff reported the incident to Nationwide, as the subcontractor’s claim was covered under the blanket policy. Nationwide conducted an investigation, informed the plaintiff that it had cancelled the policy in 1992 for nonpayment premiums and denied the plaintiff’s claim. The plaintiff alleges that it made two premium payments on the policy and that Nationwide never provided it with notice that the policy had been cancelled.

In count one, the plaintiff claims that Nationwide breached the insurance agreement. In count two, the plaintiff alleges that Nationwide’s failure to provide the plaintiff with notice violated General Statutes § 38a-324[1] and the insurance contract. In count three, the plaintiff alleges that Nationwide violated the duty of good faith and fair dealing. In count four, the plaintiff alleges that Nationwide made misrepresentations to it regarding the benefits, advantages, conditions or terms of the insurance policy and that this conduct constitutes unfair CT Page 16194 insurance practices under the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a-816(1), which constitutes violations of the Connecticut Unfair Trade Practices Act (CUPTA), General Statutes §§ 42-110g, et. seq.[2] In count five, the plaintiff incorporates the allegations of count one, the allegation of wrongful cancellation in count two and the allegations of misrepresentation in count four and further alleges that Nationwide’s acts and omissions constitutes unfair insurance practices under General Statutes §§ 38a-816 et. seq.[3] [4] which, in turn, violates CUTPA. In counts six through nine, the plaintiff alleges various claims against the Koziura Insurance Agency and Koziura.[5] [6]

On July 6, 2005, Nationwide filed a motion to strike count five of the complaint, accompanied by a memorandum in support as required by Practice Book § 11-10(3). On July 11, 2005, the plaintiff filed a memorandum in opposition. On July 11, 2005, Nationwide filed a reply memorandum and the plaintiff subsequently filed a response to Nationwide’s reply on July 28, 2005.

II DISCUSSION
“[A] motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court . . . [The courts] take the facts to be those alleged in the complaint . . . and construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency . . . [I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Thus [the courts] assume the truth of both the specific factual allegations and any facts fairly provable thereunder.” (Internal quotation marks omitted.) Labrobina v. McDonald, 274 Conn. 394, 400, 876 A.2d 522 (2005).

Nationwide moves to strike count five on the ground that the plaintiff has failed to plead facts to show that Nationwide’s conduct constituted a trade or business practice. Nationwide notes that in order for the plaintiff to succeed in a CUTPA claim based on a violation of § 38a-816(6) of CUIPA, the plaintiff must allege and prove that Nationwide engaged in unfair claim settlement practices with such frequency to indicate a general business practice. It argues that because the plaintiff alleges CT Page 16195 that Nationwide violated §§ 38a-816 et seq., which necessarily includes § 38a-816(6), the plaintiff is required to meet the specific pleading requirements of subsection six.

The plaintiff counters that it is not required to meet the pleading requirements of 38a-816(6) because count five is not premised on this subsection, but rather on an allegation that Nationwide generally violated §§ 38a-816 et seq. The plaintiff contends that the court should not strike count five because Nationwide has not shown that the plaintiff has no cause of action under any subsection of this statute.

“[T]he legislature has manifested an intention to make insurance practices the subject of two regulatory statutes, CUIPA and CUTPA.” Mead v. Burns, 199 Conn. 651, 663, 509 A.2d 11
(1986). As this court has previously noted, alleged alone, “CUIPA does not permit a private cause of action”; Green v. Government Employees Ins., Superior Court, judicial district of New Haven at Meriden, Docket No. CV 04 0287116 (February 24, 2005, Wiese, J.); but it is possible to state a cause of action under CUTPA for a violation of CUIPA. Mead v. Burns, supra, 199 Conn. 663; see also Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 645, 804 A.2d 180 (2002) (plaintiff allowed to assert CUTPA violation based on CUIPA).

The parties agree that “a CUTPA claim [that is] based on an alleged unfair claim settlement practice prohibited by §38a-816(6) [requires] proof, as under CUIPA, that the unfair settlement practice [has] been committed or performed by the defendant with such frequency as to indicate a general business practice.” (Internal quotation marks omitted.) Lees v. Middlesex Ins. Co., 229 Conn. 842, 850, 643 A.2d 1282 (1994). It is also undisputed that the plaintiff has not alleged conduct by Nationwide that constitutes a general business practice. The Supreme Court has also explained, however, that “of the sixteen categories of unfair insurance practices proscribed by General Statutes § 38a-816, only subsection (6) expressly requires proof that the unfair claim settlement practices enumerated therein were committed or performed `with such frequency as to indicate a general business practice.'” Lees v. Middlesex Ins. Co., supra, 229 Conn. 848 n. 5.

In cases addressing claims arising under other subsections of §38a-816, “Superior Court decisions have consistently held that if the language of a subsection of § 38a-816 does not require a CT Page 16196 plaintiff to prove that the defendant engaged in multiple acts, then single instances of misconduct will suffice to state a cause of action under that subsection.” (Internal quotation marks omitted.) Martinez v. Allstate Indemnity Co., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 01 0381077 (September 19, 2001, Skolnick, J.) (plaintiff’s allegations under §§ 38a-815 et seq. and §§ 38a-816(1) and (15) sufficient to withstand motion to strike even though not alleging general business practice); see also Fedora v. Worcester Ins. Co., Superior Court, judicial district of New Haven at Meriden, Docket No. CV 03 0285288 (September 28, 2004, Tanzer J.) (plaintiff bringing claim under §§ 38a-816(1) and (15) not required to allege defendant’s actions constituted general business practice); Hotak v. Barth Ins. Agency Inc., Superior Court, judicial district of Ansonia-Milford at Milford, Docket No. CV 01 0075027 (December 12, 2003, Nadeau, J.) (36 Conn. L. Rptr. 181) (plaintiff’s allegation of single unfair insurance practice sufficient to withstand motion to strike CUIPA violation based on § 38-816(8)).

Thus the issue is whether the plaintiff’s allegations are necessarily premised on § 38a-816(6), or whether they fit within any of the subsections of § 38a-816 that do not require the plaintiff to prove that the defendant engaged in multiple acts that constituted a general business practice. In count five, the plaintiff does not use the phrase “unfair claim settlement practices” which frequently signals that a count is premised on a § 38a-816(6). Instead, the plaintiff incorporates paragraph sixteen of count four, in which it alleges that Nationwide made misrepresentations to the plaintiff regarding the benefits, advantages, conditions or terms of an insurance policy. This allegation is sufficient to allege that Nationwide violated §38a-816(1)(a), which is one of the subsections of the statute that does not require proof that a defendant engaged in multiple acts of misconduct.

Accordingly, the defendant’s motion to strike is denied.

So ordered.

[1] General Statutes § 38a-324 provides in pertinent part that “[a]fter a policy of commercial risk insurance . . . has been in effect for more than sixty days . . . no insurer may cancel any policy unless the cancellation is based on the occurrence, after the effective date of the policy or renewal, of one or more of CT Page 16197 the following conditions: (1) Nonpayment of premium . . . If the basis for cancellation is nonpayment of premium, at least ten days’ advance notice shall be given and the insured may continue the coverage and avoid the effect of the cancellation by payment in full at any time prior to the effective date of cancellation.”
[2] General Statutes § 42-110g provides in relevant part that “[a]ny person who suffers any ascertainable loss of money or property . . . as a result of the use or employment of a method, act or practice prohibited by section 42-110b, may bring an action . . . to recover actual damages.
[3] General Statutes § 38a-816 provides in relevant part that “[t]he following are defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance.

(1) Misrepresentations and false advertising of insurance policies. Making, 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; (b) misrepresents the dividends or share of the surplus to be received, on any insurance policy; (c) makes any false or misleading statements as to the dividends or share of surplus previously paid on any insurance policy; (d) is misleading or is a misrepresentation as to the financial condition of any person, or as to the legal reserve system upon which any life insurer operates; (e) uses any name or title of any insurance policy or class of insurance policies misrepresenting the true nature thereof; (f) is a misrepresentation for the purpose of inducing or tending to induce to the lapse, forfeiture, exchange, conversion or surrender of any insurance policy; (g) is a misrepresentation for the purpose of effecting a pledge or assignment of or effecting a loan against any insurance policy; or (h) misrepresents any insurance policy as being shares of stock.
(6) Unfair claim settlement practices. Committing or performing with such frequency as to indicate a CT Page 16198 general business practice any of the following: (a) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue; (b) failing to acknowledge and act with reasonable promptness upon communications with respect to claims arising under insurance policies; (c) failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies; (d) refusing to pay claims without conducting a reasonable investigation based upon all available information; (e) failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; (f) not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear . . . (n) failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.
(8) Misrepresentation in insurance applications. Making 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.
(15)(A) Failure by an insurer, or any other entity responsible for providing payment to a health care provider pursuant to an insurance policy, to pay accident and health claims . . . within the time periods set forth in subparagraph (B) of this subdivision, unless the Insurance Commissioner determines that a legitimate dispute exists as to coverage, liability or damages or that the claimant has fraudulently caused or contributed to the loss.

[4] General Statutes § 38a-816(1) has been repealed as of October 1, 2005 and replaced by Public Acts 05-275, but this fact has no bearing on this action. Public Acts 2005, No. 05-61, § 2.
[5] In the sixth count, the plaintiff alleges that the Koziura Insurance Agency failed to maintain adequate insurance for the plaintiff and failed to notify the plaintiff that the blanket CT Page 16199 policy issued by Nationwide was cancelled. In count seven, the plaintiff alleges that the Koziura Insurance Agency and Koziura breached their duty to ensure that the plaintiff was adequately insured. In count eight, the plaintiff alleges that the Koziura Insurance Agency owed the plaintiff a fiduciary duty, which it subsequently breached. In count nine, the plaintiff alleges that the acts of the Koziura Insurance Agency amount to a violation of CUIPA, specifically § 38a-816(1), constituting a violation of CUTPA.
[6] On May 2, 2005, the Koziura Insurance Agency and Koziura filed a motion to strike count nine on the grounds that the plaintiff has no private cause of action under CUIPA and/or that the plaintiff’s allegations are insufficient to state a claim for violation of § 38a-816(6) or § 42-110a et seq. On June 2, 2005, the plaintiff filed its objection to the defendants’ motion to strike. This motion has not been argued and is still pending before the court.

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