LLC v. The Travelers Indemnity Co. et al. (2010)

MEMORANDUM OF DECISION RE UNDERWRITERS, INC. MOTION FOR SUMMARY JUDGMENT

This case arises from the occurrence of a “flash flood” in Stamford, Connecticut on October 11, 2007 which caused substantial damage to a number of motor vehicles owned by or in the possession of the plaintiff Razor's Auto Body & Service, LLC (Razor's).   Razor's has sued the defendant The Travelers Indemnity Co. (Travelers) which underwrote and produced two policies insuring Razor's during the relevant time period, and the defendant Underwriters, Inc. which was the insurance agency that procured the policies.   The suit arises out of the denial by Travelers of all Razor's claims for insurance proceeds.   Underwriters has moved for summary judgment dismissing the four counts directed at it alleging negligence, negligent and fraudulent misrepresentation, and violation of the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq.  (CUTPA).¹

Discussion

The court has applied the well-recognized rules regarding the proper analysis of summary judgment motions which are set out in full in the Travelers decision.   Underwriters argues that since the insurance covering Razor's at the time of the flood was a liability policy only any negligence or other default by Underwriters concerning the extent of the liability coverage could not have resulted in damages to Razor's because Razor's is not seeking liability coverage, but rather coverage for property damage.   This argument fails because in the Travelers decision this court denied Travelers summary judgment motion on the grounds that it could not decide as a matter of law that the policy in question did not provide property damage coverage.   The argument also misses the point of Razor's claims which appear to be two-fold.   First, Razor's contends that, contrary to Underwriters' (and Travelers') position, there is property damage coverage under the relevant policy, and therefore Underwriters was negligent in not knowing that the scope of the policy's coverage had been narrowed from all vehicles to those specifically identified.   Second, Razor's contends it was misled by Underwriters' agents who assured Razor's that the policy covered property damage.   Razor's principal has testified that Underwriters' agent warned him not to make a claim for every radio stolen from cars on the lot lest the policy be cancelled.   Plaintiff's Opposition, Exhibit 3, pp. 121-22, 132-23;  see also id.   Exhibit 1 Affidavit of Charles Razor, ¶¶ 8-10.   Based on representations like that, it is not hard to understand why Razor's thought it had property damage coverage.

As to the misrepresentation and negligence counts, the court finds there are numerous unresolved material facts which preclude summary judgment.   Those include questions about what was represented to Razor's by Underwriters' agents, what kind of insurance coverage Razor's sought, why the coverage was changed from all vehicles to specifically identified vehicles, and who was responsible for that change.

Turning to the eighth count alleging a violation of CUTPA, Underwriters contends that its alleged actions of failure to provide adequate coverage, allowing a unilateral change in coverage and not supplying Razor's with a copy of the policy when requested, do not amount to being involved in the entrepreneurial aspects of the insurance agency business, but are claims of professional incompetence which the Connecticut Supreme Court has held do not give rise to a CUTPA claim.   See Suffield Development Associates L.P. v. National Loan Investors, L.P., 260 Conn. 776 (2003);  Beverly Hill Concepts, Inc. v. Schatz & Schatz, Ribicoff & Kotkin, 247 Conn. 48 (1998).   How CUTPA applies to the activities of insurance agents has not been clearly settled in Connecticut law.   This court holds that the allegations against Underwriters are not those of professional incompetence, but of business negligence, and therefore, the allegations have the potential to spawn a CUTPA claim.   See Plummer v. Goodman, Superior Court, judicial district of New Britain, CV 09 5013886 (March 10, 2010, Trombly, J.).

Conclusion

There are material unresolved questions of fact precluding summary judgment on any of the counts directed at Underwriters.   The motion for summary judgment is denied.

TAGGART D. ADAMS

SUPERIOR COURT JUDGE

FOOTNOTES

FN1. In another memorandum of decision issued today, the court has denied Traveler's summary judgment motion (Traveler's decision).   Familiarity with that memorandum is assumed..  FN1. In another memorandum of decision issued today, the court has denied Traveler's summary judgment motion (Traveler's decision).   Familiarity with that memorandum is assumed.

Adams, Taggart D., J.