MBMB LLC v. LLC (2011)

MEMORANDUM OF DECISION RE MOTION TO STRIKE (# 114)

PROCEDURAL HISTORY

The plaintiff, MBMB, LLC, commenced the present action against the defendants, Alpha Abatement, LLC (Alpha Abatement), the Estate of Israel South and Gulf Underwriters Insurance Company (Gulf Insurance), on April 1, 2010.   The eight-count operative complaint was filed on August 5, 2010, and stems from an alleged breach of a contract for the provision of lead abatement services (the contract) by Alpha Abatement.   The plaintiff alleges the following relevant facts.   At the time it entered into the contract with Alpha Abatement, Israel South was the sole member of Alpha Abatement.   Pursuant to the contract, Alpha Abatement was required to obtain two million dollars of liability insurance, one million of which was purchased from Gulf Insurance.   In addition, the parties agreed that, in the event of a breach, they would proceed to mediation if they were unable to agree on the amount and payment of damages.   After they breached the contract, Alpha Abatement and South failed to participate in such mediation.   The present matter concerns count seven of the plaintiff's revised complaint, in which the plaintiff makes a breach of contract claim against Gulf Insurance and alleges the following.   The plaintiff has suffered damages as a result of Alpha Abatement's breach of the contract.   Pursuant to the insurance contract between Gulf Insurance and Alpha Abatement, Gulf Insurance had a specific duty to indenmify Alpha Abatement in the requested arbitration for legitimate claims made against it.   It was the intention of Alpha Abatement and Gulf Insurance “at the time that they contracted that the plaintiff ․ would be an intended beneficiary of the insurance contract.”   The performance of the insurance contract will satisfy Alpha Abatement's obligation to compensate the plaintiff for the losses it has sustained.¹

On October 6, 2010, Gulf Insurance filed a motion to strike count seven from the plaintiff's revised complaint on the grounds that:  (1) the plaintiff may not assert a direct cause of action against it for damages caused by a tortfeasor;  and (2) the plaintiff has not alleged facts sufficient to establish that the plaintiff is a third-party beneficiary to the insurance contract between Gulf Insurance and Alpha Abatement.²  That motion was accompanied by a memorandum of law.   On November 23, 2010, the plaintiff filed an objection to the motion to strike.   Gulf Insurance filed a reply on December 16, 2010.   The court heard oral argument on this matter on December 20, 2010.

DISCUSSION

“The purpose of a motion to strike is to contest ․ the legal sufficiency of any 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).  “In ruling on a motion to strike, the court is limited to the facts alleged in the complaint.”  (Internal quotation marks omitted.)  Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997).  “[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied ․ 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 ․ Indeed, pleadings must be construed broadly and realistically, rather than narrowly and technically.”  (Internal quotation marks omitted.)   Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006).   “Practice Book ․ § 10-39, allows for a claim for relief to be stricken only if the relief sought could not legally be awarded.”  Pamela B. v. Ment, 244 Conn. 296, 325, 709 A.2d 1089 (1998).

In support of its motion to strike, Gulf Insurance asserts that the plaintiff's breach of contract claim is based upon an alleged breach by Alpha Abatement, for which Gulf Insurance was the liability insurance carrier.   It contends that the plaintiff's failure to allege the existence of a contractual relationship between the plaintiff and Gulf Insurance is fatal to its breach of contract claim.   In addition, it argues that the plaintiff has pleaded insufficient facts to allege that it is a third-party beneficiary of the insurance contract.   In response, the plaintiff argues that it has sufficiently stated a claim as a third-party beneficiary to the insurance contract.

As an initial matter, the court addresses Gulf Insurance's argument that count seven must be stricken because the plaintiff is attempting to state a direct claim against Gulf Insurance as the insurer of the alleged tortfeasors, Alpha Abatement and South.   Gulf Insurance correctly notes that the judges of the Superior Court have consistently held that “a claimant does not have a direct cause of action against an insurance company of the tortfeasor ․” (Internal quotation marks omitted.)   Asmus Electric, Inc. v. G.M.K. Contract, Superior Court, judicial district of New Haven, Docket No. CV 04 0489527 (February 25, 2005, Lopez, J.);   see also Johnson v. Preston, Superior Court, judicial district of New London at Norwich, Docket No. 128433 (August 4, 2004, Martin, J.).   In count seven, however, the plaintiff alleges that Gulf Insurance was the insurer of Alpha Abatement and, as such, had a specific duty to indemnify Alpha Abatement for claims against it.   It further alleges that Alpha Abatement and Gulf Insurance intended that the plaintiff would be a beneficiary of the insurance contract.   This language indicates that the plaintiff is not attempting to state a direct claim against Gulf Insurance based upon the alleged breach of contract between Alpha Abatement and the plaintiff.   Rather, the plaintiff is attempting to state a claim based upon its alleged status as a third-party beneficiary to the insurance contract between Gulf Insurance and Alpha Abatement.   Thus, the court rejects Gulf Insurance's first argument in support of its motion to strike.

In light of the foregoing, the dispositive issue before the court is whether the plaintiff has sufficiently pleaded its breach of contract claim against Gulf Insurance as a third-party beneficiary to the insurance contract between Gulf Insurance and Alpha Abatement.   Gulf Insurance argues that, in order to state a claim as a third-party beneficiary to the insurance contract, the plaintiff must allege that the parties intended that Gulf Insurance should assume a direct obligation to the plaintiff.   It further asserts that the plaintiff has failed to plead such an allegation.³  In the alternative, Gulf Insurance argues that if the plaintiff has sufficiently alleged the existence of a contractual relationship between it and Gulf Insurance, it has failed to allege a breach of an obligation owed to the plaintiff.   In its objection to the motion to strike, the plaintiff argues that it has sufficiently pleaded that it is an intended third-party beneficiary of the insurance contract because:  (1) it pleaded that this was the intent of the parties;  (2) the insurance contract lists the plaintiff as an additional insured;  and (3) the certificate of liability insurance lists the plaintiff.

“The elements of a breach of contract action are the formation of an agreement, performance by one party, breach of the agreement by the other party and damages.”  (Internal quotation marks omitted.)  Pelletier v. Galske, 105 Conn.App. 77, 81, 936 A.2d 689 (2007), cert. denied, 285 Conn. 921, 943 A.2d 1100 (2008).  “It is axiomatic that the parties to a contract or a contemplated beneficiary thereof may sue to enforce the promises of that contract.”   Atlas v. Miller, 20 Conn.App. 680, 682, 570 A.2d 219 (1990).  “The law regarding the creation of contract rights in third parties in Connecticut is ․ well settled ․ [T]he ultimate test to be applied [in determining whether a person has a right of action as a third party beneficiary] is whether the intent of the parties to the contract was that the promisor should assume a direct obligation to the third party [beneficiary] and ․ that intent is to be determined from the terms of the contract read in the light of the circumstances attending its making, including the motives and purposes of the parties ․ [T]he only way a contract [can] create a direct obligation between a promisor and a third party beneficiary would have to be ․ because the parties to the contract so intended.”  (Citations omitted;  internal quotation marks omitted.)  Gazo v. Stamford, 255 Conn. 245, 261, 765 A.2d 505 (2001).  “[T]he fact that a person is a foreseeable beneficiary of a contract is not sufficient for him to claim rights as a third party beneficiary.”   Grigerik v. Sharpe, 247 Conn. 293, 317-18, 721 A.2d 526 (1998).  “While there is [little] appellate guidance on third-party beneficiary status as it impacts insurance parties, there are unreported Superior Court cases which carefully analyze those issues.   They conclude that an injured party is not, without more, a third party beneficiary of the insurance contract between a tortfeasor and the insurance company.”   Estate of Ridgaway v. Cowles & Connell, Superior Court, complex litigation docket at Middletown, Docket No. X04 CV 03 0103516 (May 21, 2004, Quinn, J.).

Whether the plaintiff is an intended beneficiary of the insurance contract requires an interpretation of that contract.  “[O]rdinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact ․” Tallmadge Bros. v. Iroquois Gas Transmission System, 252 Conn. 479, 495, 746 A.2d 1277 (2000).  “Several Connecticut Superior Court decisions have held that contractual interpretation, being a question of fact, is inappropriate for a motion to strike.”   AIU Ins. Co. v. Stonington Water Street, Superior Court, judicial district of New London, Docket No. CV 08 6000749 (July 10, 2009, Martin, J.).   Thus, the court does not address the issue of whether, as a matter of fact, the plaintiff is an intended beneficiary of the insurance contract.   Rather, the court is compelled to take all the well pleaded facts as admitted.  Violano v. Fernandez, supra, 280 Conn. 310.

For the purposes of Gulf Insurance's motion to strike, the court considers the plaintiff's allegations that the certificate of insurance provided by Gulf Insurance to Alpha Abatement lists the plaintiff as an additional insured and, at the time that Alpha Abatement and Gulf Underwriters entered into the insurance contract, the parties intended that the plaintiff would be an intended beneficiary of the insurance contract.   The facts, as alleged, imply that the parties to the insurance contract intended for Gulf Insurance to have a direct obligation to the plaintiff and that the plaintiff should be a third-party beneficiary to the insurance.   Furthermore, despite Gulf Insurance's arguments to the contrary, the plaintiff has pleaded that Gulf Insurance breached an obligation it owed to the plaintiff as a third-party beneficiary to such insurance contract.   Namely, the plaintiff alleges that Gulf Insurance failed to indemnify Alpha Abatement at the requested mediation proceeding.   Thus, the plaintiff has pleaded allegations sufficient to state a breach of contract claim against Gulf Insurance as a third-party beneficiary to the insurance contract.

CONCLUSION

Accordingly, for the foregoing reasons, Gulf Insurance's motion to strike is denied.

Wilson, J.

FOOTNOTES

FN1. The court notes that the plaintiff attached two relevant documents to its complaint.   The first is the certificate of liability insurance provided by “CT Insurance Exchange” to Alpha Abatement for commercial general liability and pollution liability.   The insurer is listed as “Gulf Ins. Group” and the plaintiff is listed as the certificate holder.   The second document is the lead abatement contract between the plaintiff and Alpha Abatement..  FN1. The court notes that the plaintiff attached two relevant documents to its complaint.   The first is the certificate of liability insurance provided by “CT Insurance Exchange” to Alpha Abatement for commercial general liability and pollution liability.   The insurer is listed as “Gulf Ins. Group” and the plaintiff is listed as the certificate holder.   The second document is the lead abatement contract between the plaintiff and Alpha Abatement.

FN2. Gulf Insurance also moves to strike count eight, a second breach of contract claim against it.   The plaintiff withdrew that claim on November 23, 2010..  FN2. Gulf Insurance also moves to strike count eight, a second breach of contract claim against it.   The plaintiff withdrew that claim on November 23, 2010.

FN3. The court notes that Gulf Insurance argues that the “facts as alleged, are insufficient to establish that MBMB has standing as a third party beneficiary to the contract ․” The court reads that argument as an assertion that the plaintiff has failed to plead facts sufficient to establish that it is an intended third-party beneficiary to the contract rather than a challenge to the plaintiff's standing to bring its claims, which would be properly addressed in a motion to dismiss..  FN3. The court notes that Gulf Insurance argues that the “facts as alleged, are insufficient to establish that MBMB has standing as a third party beneficiary to the contract ․” The court reads that argument as an assertion that the plaintiff has failed to plead facts sufficient to establish that it is an intended third-party beneficiary to the contract rather than a challenge to the plaintiff's standing to bring its claims, which would be properly addressed in a motion to dismiss.

Wilson, Robin L., J.