Edible Arrangements v. KEH (2010)

MEMORANDUM OF DECISION RE MOTION TO STRIKE # 184

This is the fourth motion to strike filed by the defendant.¹  The facts and procedural history underlying this action are fully set forth in Edible Arrangements v. Brenner, Superior Court, judicial district of New Haven, Docket No. CV 08 5019963 (September 14, 2009, Robinson, J.).   The plaintiff, Edible Arrangements, Inc., filed its third amended complaint on September 28, 2009.   At issue in the present motion to strike is count seven, which alleges that the defendant OneBeacon Midwest Insurance Company, violated the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a-816(6), which therefore, violated the Connecticut Unfair Trade Practices Act (CUTPA).   On October 13, 2009, the defendant filed its motion to strike and its memorandum in support.   The plaintiff filed its objection on October 28, 2009, to which the defendant filed its reply on October 29, 2009.   The parties argued their position at Short Calendar on November 2, 2009.

“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).  “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).   Accordingly, “[i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied.”  (Internal quotation marks omitted.)  American Progressive Life & Health Ins. Co. of New York v. Better Benefits, LLC, 292 Conn. 111, 120, 971 A.2d 17 (2009).

Paragraphs thirty-eight through forty-two of count seven of the plaintiff's third amended complaint allege the following.  “OneBeacon has, in strict violations of the provisions of Conn. Gen.Stat. § 38a-816(6), failed to satisfy the legal obligations it owes to the plaintiff, its insured, and as a result thereof, the plaintiff has suffered damages.   Upon information and belief, the defendant, OneBeacon, has, on more than a single occasion, failed to satisfy the legal obligations it owes to its insureds, which in 2005 resulted in a jury in Ramsey County, Minnesota awarding its insured, API Inc., $52.5 million as a result of OneBeacon failing to defend API against hundreds of personal injury and wrongful death claims.   Upon further information and belief, OneBeacon has failed to satisfy the legal obligations owing to its insured on another occasion, which, in the case of Lang v. Anten, resulted in the Louisiana Fourth Circuit Court of Appeals in 2005, upholding a trial court's decision that OneBeacon, contrary to its position taken in the litigation, had a duty to defend its insured, who was a defendant in thousands of asbestos suits, and also determining that the trial court did not abuse its discretion in finding that OneBeacon in contempt of court for failing to provide a full defense to its insured after the trial judge's open court mandate to do so.   The adverse determinations against OneBeacon ․ resulted in the same conduct on the part of OneBeacon in failing to satisfy the legal obligations owing to its insureds that is at issue in this case.   The plaintiff reserves the right to allege other instances where OneBeacon has failed to satisfy the legal obligations it owes to its insureds in a similar manner to the way it is alleged to have done so in this case as the discovery process progresses.   OneBeacon's failure to satisfy the legal obligations it owes to its insureds offends public policy and is immoral, unethical, oppressive or unscrupulous, thereby constituting a violation of [CUTPA].”

The defendant's primary argument is that the plaintiff's additional references to two unrelated instances in Minnesota and Louisiana, in or about 2005, does not cure the deficiencies in count seven, which have previously necessitated that it be stricken from the plaintiff's complaint.   The defendant contends:  “A mere conclusory reference to the two instances does not set forth any factual allegations of insurance misconduct by OneBeacon.   Nor does it establish that the supposed activity in those cases is the same as the actions alleged in this case.”   Further, the defendant also notes that the plaintiff again fails to identify which subsection of § 38a-816(6) was allegedly violated in this case and “additionally fails to set forth which of the subsections OneBeacon allegedly violated with regard [sic] to the two incidents cited ․ If they are not the same [subsection], then no ‘general business practice’ can be established.”

General Statutes § 38a-816(6) states:  “The following are defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance ․ Unfair claim settlement practices.   Committing or performing with such frequency as to indicate a general business practice any of the following ․” Subsection (6)(a) through (o) then lists fifteen unfair claim settlement practices.²  It is well established that “isolated instances of unfair insurance settlement practices are not so violative of the public policy of this state as to warrant statutory intervention.”  Mead v. Burns, 199 Conn. 651, 666, 509 A.2d 11 (1986).

The Supreme Court has stated, “[u]nder this section of CUIPA, the claimant must allege and prove facts sufficient to show that the insurer was ‘[c]ommitting or performing [certain specified acts ] with such frequency as to indicate a general business practice ․’ General Statutes § 38a-816(6).”  (Emphasis added.)  Heyman Associates No. 1 v. Ins. Co. of the State of Pennsylvania, 231 Conn. 756, 796, 653 A.2d 122 (1995).   Moreover, the Supreme Court has recognized that “the duties ordinarily associated with [CUTPA and CUIPA claims] derive from different sources than claims that rely instead on an underlying insurance contract ․ In a CUIPA and CUTPA claim, the insurer's duty stems not from the private insurance agreement but from a duty imposed by statute.”  (Citation omitted;  internal quotation marks omitted.)  Id., 790.   And, “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.”   (Internal quotation marks omitted.)  Lees v. Middlesex Ins. Co., 299 Conn. 842, 845, n.5, 643 A.2d 1282 (1994).

There is a split of authority among the trial courts as to how many specific instances of insurer misconduct the plaintiff must plead in order to establish the allegation of a general business practice.   See, Ambrose v. Golden Rule Ins. Co., Superior Court, judicial district of Danbury, Docket No. CV 07 5003730 (July 28, 2008, Shaban, J.) (“[T]here is no appellate authority as to whether a plaintiff must plead other specific instances of unfair settlement practices on the part of an insurer in order to satisfy the allegation of a general business practice and ․ the superior court decisions are split on the issue”).   The majority of trial courts have required the plaintiff to allege several acts of insurer misconduct with other policyholders.   See, e.g. Smith v. Geico General Ins. Co., Superior Court, judicial district of New London, Docket No. CV 08 5006746 (April 7, 2009, Martin, J.) (“[F]or a CUTPA/CUIPA claim to survive a motion to strike ․ the majority of superior court decisions have ․ require[d] that claims of unfair settlement practices under CUIPA [show] ․ more than a single act of insurer misconduct ․ [and] that there must be evidence of misconduct by the insurer in the processing of other policyholders' claims in order to rise to the level of general business practice”);  and Major v. Allstate Ins. Co., Superior Court, judicial district of New Britain, Docket No. CV 05 4004913 (February 9, 2009, Pittman, J.) (The court concluded that the plaintiff had sufficiently pled a cause of action, because the plaintiff specifically identified the section of 38-816(6) which the defendant violated and listed nine other cases by name m which she claimed that the defendant had engaged in similar dilatory conduct).

This court adopts the reasoning of the majority of superior court decisions and concludes that in order to plead a violation of CUTPA pursuant to CUIPA, the plaintiff must sufficiently allege both the specific statutory subsection which the defendant violated and a factual pattern of misconduct with other policy-holders to support a claim of general business practice.   Therefore, the court turns to the specific allegations in the operative complaint to determine whether the plaintiff's allegations are sufficient.

In its third amended complaint, the plaintiff alleges, once again and by incorporation, that the defendant breached its contractual obligations and its duty to defend and indemnify the plaintiff in failing to provide the plaintiff with a legal defense and/or indemnify it.   The plaintiff references two lawsuits in which it claims that the defendant failed to defend other insureds.   Despite pleading these additional allegations, which the plaintiff argues are legally sufficient to show a “general business practice,” the court finds that the plaintiff has failed to cure the deficiencies which have compelled this court to strike count seven on three previous occasions.³

Additionally, the plaintiff has yet again failed to indicate which of the fifteen subsections of § 38a-816(6) it is claiming that the defendant violated in this case and in the other two lawsuits that it cites in its third amended complaint.   In order to make a legally sufficient claim under § 38a-816(6), the plaintiff must plead facts that demonstrate that the insurer's alleged misconduct falls within one of the fifteen subsections of § 38a-816(6) and further, allege that the defendant has engaged in similar unfair settlement practices with other policy-holders.   As the plaintiff has failed to do this, the defendant's motion to strike is hereby granted for a fourth time.

Robinson, A., J.

FOOTNOTES

FN1. The first motion to strike was resolved by memorandum of decision, dated December 29, 2008.   Edible Arrangements v. KEH/L.H. Brenner, Superior Court, judicial district of New Haven at New Haven, Docket No. CV 085019963 (December 29, 2008, Corradino, J.).   The second motion was denied in a May 14, 2009 decision.   Edible Arrangements v. KEH/L.H. Brenner, Superior Court, judicial district of New Haven at New Haven, Docket No. CV 085019963 (May 14, 2009, Corradino, J.).   This court issued a third memorandum of decision addressing a motion to strike the complaint on September 14, 2009.   Edible Arrangements v. KEH/L.H. Brenner, Superior Court, judicial district of New Haven at New Haven, Docket No. CV 085019963 (September 14, 2009, Robinson, J.).  FN1. The first motion to strike was resolved by memorandum of decision, dated December 29, 2008.   Edible Arrangements v. KEH/L.H. Brenner, Superior Court, judicial district of New Haven at New Haven, Docket No. CV 085019963 (December 29, 2008, Corradino, J.).   The second motion was denied in a May 14, 2009 decision.   Edible Arrangements v. KEH/L.H. Brenner, Superior Court, judicial district of New Haven at New Haven, Docket No. CV 085019963 (May 14, 2009, Corradino, J.).   This court issued a third memorandum of decision addressing a motion to strike the complaint on September 14, 2009.   Edible Arrangements v. KEH/L.H. Brenner, Superior Court, judicial district of New Haven at New Haven, Docket No. CV 085019963 (September 14, 2009, Robinson, J.)

FN2. “(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;  (g) compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds;  (h) attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application;  (i) attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of the insured;  (j) making claims payments to insureds or beneficiaries not accompanied by statements setting forth the coverage under which the payments are being made;  (k) making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;  (l) delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;  (m) failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;  (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;  (o) using as a basis for cash settlement with a first party automobile insurance claimant an amount which is less than the amount which the insurer would pay if repairs were made unless such amount is agreed to by the insured or provided for by the insurance policy.”.  FN2. “(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;  (g) compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds;  (h) attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application;  (i) attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of the insured;  (j) making claims payments to insureds or beneficiaries not accompanied by statements setting forth the coverage under which the payments are being made;  (k) making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;  (l) delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;  (m) failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;  (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;  (o) using as a basis for cash settlement with a first party automobile insurance claimant an amount which is less than the amount which the insurer would pay if repairs were made unless such amount is agreed to by the insured or provided for by the insurance policy.”

FN3. The court concurs with the reasoning of Judge Corradino in Thomas v Biller Assoc.   Tri-State, Inc., Superior Court, judicial district of New Haven at New Haven, Docket No. CV 05 40106955 (August 31, 2009) [48 Conn. L. Rptr. 517], in which he concluded that complaints filed by other clients of defendant with Connecticut Insurance Department could be used to show acts of misconduct that established a general business practice in violation of § 38a-816(6).   Thus judicial findings concluding that an insurer had mishandled claims against its insureds would similarly be admissible to establish a general practice if they were sufficient in other respects, namely number, frequency and similarity..  FN3. The court concurs with the reasoning of Judge Corradino in Thomas v Biller Assoc.   Tri-State, Inc., Superior Court, judicial district of New Haven at New Haven, Docket No. CV 05 40106955 (August 31, 2009) [48 Conn. L. Rptr. 517], in which he concluded that complaints filed by other clients of defendant with Connecticut Insurance Department could be used to show acts of misconduct that established a general business practice in violation of § 38a-816(6).   Thus judicial findings concluding that an insurer had mishandled claims against its insureds would similarly be admissible to establish a general practice if they were sufficient in other respects, namely number, frequency and similarity.

Robinson, Angela C., J.