Starview Ventures v. Acadia Insurance Co. (2011)

Ruling on Motion to Strike

At issue is whether the court should grant the third-party defendant's motion to strike five counts of the third-party complaint on the ground that they each fail to state a cause of action as a matter of law.   The court denies the motion.

FACTS

The plaintiff, Starview Ventures, commenced the present action by service of process against defendants Acadia Insurance Company (Acadia), Underwriters at Lloyd's of London (Lloyd's), Matthew Humphrey (Humphrey) and Geoffrey Lyn (Lyn) on April 5, 2006;  defendant Joseph Krar and Associates (Krar) on April 6, 2006;  defendant DNM Autocare, LLC (DNM) on April 11, 2006;  and defendant Dwight Fowlin (Fowlin) on April 12, 2006.   There have been changes in the identities of the defendants since the initiation of the action.   First, on March 28, 2007, the plaintiff moved to cite Wachovia Bank, N.A. into the action and amended the complaint to add two counts against Wachovia.   Second, the plaintiff withdrew the action against Acadia in exchange for $15,000 on April 8, 2009.   Finally, the plaintiff withdrew the action against Lloyd's and Krar in exchange for the assignment of Lloyd's and Krar's third-party causes of action against Webster Bank, N.A. (Webster) and the third-party defendant who brings the present motion, United Adjusters, LLC (United), on May 7, 2009.¹  The plaintiff's motion to substitute itself as the third-party plaintiff in Lloyd's and Krar's third-party action was granted by the court, Blue, J., on February 9, 2009.

The operative version of the plaintiff's complaint is the third amended version filed on March 28, 2007.   It alleges the following relevant facts.   On April 13, 2004, a fire damaged property located at 30 Orange Avenue in New Haven.   The property was owned by the plaintiff and leased to DNM. Humphrey, Lyn and Fowlin were DNM's principals at the time of the fire.   The plaintiff had a commercial property insurance policy with Acadia that was in effect at the time of the fire.   DNM also had an insurance policy for the property in effect at the time of the fire, with Lloyd's.   Krar acted as Lloyd's agent or representative.   Acadia refused to pay the plaintiff for its loss.   Lloyd's, however, accepted DNM's claim of loss.   Therefore, both the plaintiff and DNM hired public adjusting firms to assess the cost and extent of the damage.   Biller Associates TA–State, LLC was the plaintiff's public adjuster.   DNM's public adjuster was the third-party defendant.   After both firms' assessments, on or about November 22, 2004, Lloyd's issued a settlement check (check) payable to the plaintiff, DNM and the third-party defendant through Krar to the third-party defendant in the amount of $86,966.72.   The check was drawn from Krar's account with Webster.   On or about November 29, 2004, Humphrey endorsed the check on behalf of DNM, and a representative of the third-party defendant did likewise.   They presented the check to Wachovia on or about November 30, 2004.   Wachovia paid the check without the plaintiff's endorsement.   The plaintiff has yet to receive any amounts from the check, either directly or by virtue of repairs done to the subject property and funded by the check's proceeds.   Counts four and five of the complaint were against Lloyd's and Krar, respectively, and both sounded in negligence for failure to name Biller Associates–TA State, LLC, the plaintiff's public adjuster, as a payee on the check.   The plaintiff alleged in counts four and five that Lloyd's and Krar's negligence resulted in its failure to receive notice of the check's issuance and harmed it in the amount of the check proceeds to which it was entitled.

On January 18, 2007, Lloyd's and Krar filed a motion to implead, inter alia, Webster and the third-party defendant as third-party defendants.   The operative version of the third-party complaint is the third revised version filed on December 18, 2008.   It is the operative pleading with respect to the present motion.   Counts two, four, five, six and seven are against the third-party defendant and sound in conversion, constructive trust, breach of fiduciary duty, breach of contract and promissory estoppel.   Count three was also against the third-party defendant and sounded in indemnification.   On September 17, 2009, the third-party defendant filed a motion for summary judgment on these six counts.   The ground for the motion was that the assignment of these causes of action was void as against public policy.   The court, Wilson, J., granted the motion with respect to count three and denied the motion with respect to the remaining counts against the third-party defendant.   Starview Ventures v. Acadia Ins. Co., Superior Court, judicial district of New Haven, Docket No. CV 06 5003463 (December 16, 2009, Wilson, J.) (49 Conn. L. Rptr. 145).

The third-party defendant filed the present motion to strike and a memorandum of law in support thereof on July 30, 2010.   The plaintiff, acting as the third-party plaintiff, in turn filed an objection to the motion and a memorandum of law in support thereof on September 8, 2010.   The court heard the matter at short calendar on January 31, 2011.

DISCUSSION

“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).  “We take the facts to be those alleged in the complaint ․ and we construe the complaint in the manner most favorable to sustaining its legal sufficiency ․ Thus [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied ․ Moreover, we note that [w]hat is necessarily implied [in an allegation] need not be expressly alleged ․ 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.)   Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 295 Conn. 240, 252–53, 990 A.2d 206 (2010).   The court is limited to the facts alleged in the complaint in ruling on a motion to strike.  Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997).

The third-party defendant in the present action moves to strike counts two, four, five, six and seven of the third-party complaint on the ground that they are not legally cognizable third party causes of action, because:  “Third party claims are conditioned upon the defendant being found liable to the plaintiff and damages are limited to the damages incurred by the defendant as a result of negligence alleged by the plaintiff.   The remaining claims in the third party complaint set forth independent causes of action and are not based on the defendants' liability to the plaintiff.”   The plaintiff, acting as the third-party plaintiff, objects to the motion by arguing that the law of the case doctrine precludes the present motion and that the counts are legally sufficient because they are based upon the same transaction as the counts in the original complaint.

General Statutes § 52–102a governs the initiation of third-party actions and provides in relevant part:  “(a) A defendant in any civil action may move the court for permission as a third-party plaintiff to serve a writ, summons and complaint upon a person not a party to the action who is or may be liable to him for all or part of the plaintiff's claim against him.” ²  “As a fundamental and threshold requirement, a third party plaintiff must allege that the third party defendant is or may be liable to the third party plaintiff for all or part of the plaintiff's claim against him.”  Commissioner of Environmental Protection v. Lake Phipps Land Owners Corp., 3 Conn.App. 100, 102, 485 A.2d 580 (1985) “The right to implead a third-party defendant exists even though his ultimate liability to the impleading plaintiff is not yet determined.   But the impleading plaintiff must allege facts to support proof that the third-party defendant in question ‘is or may be liable’ so as to state a cause of action within the requirements of the statute.”  First New Haven National Bank v. Rosenberg, 33 Conn.Sup. 1, 3, 335 A.2d 319 (1975).  “A defendant is not permitted to bring in third parties for the purpose of litigating with them matters in no way connected with the suit.”  Allen v. Chase, 81 Conn. 474, 476, 71 A. 367 (1908).

The third-party defendant argues in its memorandum:  “The claims of conversion, constructive trust, breach of fiduciary duty, breach of contract and promissory estoppel all have their own elements of proof and are therefore separate and distinct causes of action from the plaintiff's underlying negligence claim.”   It also argues:  “Here, Lloyd's and Krar's claims are for more than mere indemnification.   Rather, they allege independent claims for conversion, constructive trust, breach of fiduciary duty, breach of contract and promissory estoppel, all of which are outside the scope of an indemnification claim.”   For support, it cites and discusses Lisinski v. New London, Superior Court, judicial district of New London, Docket No. CV 03 0564377 (October 4, 2005, Jones, J.) (40 Conn. L. Rptr. 43), and Security Capital Management, Inc. v. De Monico, Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. CV 89 0101795 (June 12, 1990, Lewis, J.) (1 Conn. L. Rptr. 735).   Lisinski and Security Capital Management, Inc., however, are factually and legally distinguishable from the present action.

In Lisinski, the plaintiff slipped and fell in a parking garage owned by the defendant.   The defendant brought a third-party action against the company that managed the garage and the insurer that provided liability coverage for the garage.   The third-party defendants moved to dismiss the third-party plaintiff's causes of action sounding in breach of contract, violation of the Connecticut Unfair Insurance Practices Act (CUIPA) and violation of the Connecticut Unfair Trade Practices Act (CUTPA).   The CUIPA and CUTPA causes of action were based on the third-party defendant insurer's alleged failure to defend the third-party plaintiff in the original action and provide coverage for the plaintiff's slip and fall incident.

The court treated the motion to dismiss as a motion to strike.   It denied the motion with respect to two of the breach of contract causes of action because they sufficiently stated that “due to a breach of a contractual obligation, [the third-party defendant] may be liable to [the third-party plaintiff] for any or all damages or losses incurred or which will be incurred in connection with the subject incident complained of in the plaintiff's underlying claim against the [defendant].”  Lisinski v. New London, supra, 40 Conn. L. Rtpr 45.   The court also noted that “the requirement that the [third-party plaintiff] allege that [the third-party defendant] may be liable for all or part of the claims the plaintiff has made against it [was] met.”  Id. It then struck the other two breach of contract causes of action on the ground that they were conclusory.   It finally struck the CUIPA and CUTPA causes of action for the reason that they were “not contingent on the underlying negligence action against” the third-party defendant.  Id. In striking those causes of action, the court noted that the third-party plaintiff sought statutory attorneys fees and punitive damages, which were impermissible because they were in excess of the relief sought by the plaintiff against the defendant.

In Security Capital Management, Inc., the plaintiff employer brought an action sounding in breach of contract, money had and received, conversion and unjust enrichment to recover part of an advance made to the defendant former employee.   The defendant in turn filed a counterclaim and then sought to implead the two principals of the plaintiff.   He filed a third-party complaint sounding in breach of contract, constructive discharge, anticipatory breach of contract, repudiation and fraud.   He alleged that the principals were liable for the plaintiff's causes of action against him because they “completely dominated Security Capital's financing, policies, and practices.”  Security Capital Management, Inc. v. De Monico, supra, 1 Conn. L. Rptr. 736.   The counterclaim complaint and third-party complaint were identical with respect to several allegations and all of the requested relief, which did not include contribution or indemnity.   The court denied the defendant's motion to implead for the reason that the third-party action would be a “separate and distinct ‘direct’ cause of action” that “would not be contingent upon the finding of defendant De Monico's liability to plaintiff Security Capital,” because the defendant would be required to “establish [the] personal liability of [the principals] by ‘piercing the corporate veil’ in order to obtain recovery.”   Id., 737.

The third-party complaint in the present action alleges in counts two, four, five, six and seven:  “Underwriters and Krar now join the Third–Party Defendants identified herein because those third parties are liable to Underwriters for all or part of Starview's claims against them.   Any liability Underwriters and Krar may conceivably have to Starview rests with the Third–Party Defendants because the Settlement Check should not have been cashed without Starview's endorsement and because United undertook a duty to take charge of, oversee and manage the handling of the Settlement Check, including seeing that all endorsements were obtained, that Starview was notified of the issuance of the Settlement Check and that Starview was issued its share of the settlement proceeds.”   In the prayer for relief, the third-party complaint requests only that the court hold the third-party defendant liable on counts two, four, five, six and seven and that the court order the third-party defendant to pay the amount of the check proceeds sought by the plaintiff from Lloyd's and Krar.

The third-party complaint thus does not seek to recover damages in excess of what was sought from Lloyd's and Krar in the original complaint, unlike the third-party complaints in Security Capital Management, Inc. and Lisinski.   Furthermore, the third-party complaint alleges that the third-party defendant's conduct caused the plaintiff's failure to receive notice of the check's issuance, which in turn caused the plaintiff's failure to receive its share of the check's proceeds.   In the negligence causes of action brought against Lloyd's and Krar, the plaintiff alleged that their conduct—i.e., their omission of the plaintiff's adjuster from the payee line on the check—caused its failure to receive notice of the check's issuance and subsequent failure to receive its share of the check's proceeds.   The third-party complaint accordingly alleges facts sufficient to state that the third-party defendant “is or may be liable for all or part of the plaintiff's claim against” it.

Even if the court accepted the third-party defendant's argument that the causes of action in the third-party complaint are independent of the causes of action against Lloyd's and Krar in the original complaint, the court would still be disinclined to grant the present motion.   The original complaint and the third-party complaint rely upon the same factual predicate.   There is a clear and persuasive line of reasoning in “trial court decisions which deny motions to strike third-party complaints even when they allege purportedly independent claims because one of the purposes of § 52–102a is to obviate the need for multiple actions arising from the same transaction.   See Cambridge Mutual Fire Ins. Co. v. Michaud, Superior Court, judicial district of Hartford, Docket No. CV 07 4032988 (August 9, 2008, Wagner, J.) (46 Conn. L. Rptr. 96) (‘[s]ince the third-party complaint entails similar and related issues ․ the motion to strike is denied’);  Chen v. Celon, Superior Court, judicial district of Fairfield, Docket No. CV 02 0391304 (March 30, 2006, Rodriguez, J.) (41 Conn. L. Rptr. 105, 107) (granting motion to strike on other grounds, but stating that independent ‘allegation in the present case arises from the same set of events as the original complaint, and accordingly, may be maintained in the third-party complaint pursuant to § 52–102a’);  Wise v. Bickford, Superior Court, judicial district of Hartford, Docket No. CV 97 571001 (September 17, 1997, Teller, J.) (20 Conn. L. Rptr. 218) (denying motion to strike third-party plaintiffs' independent negligence claim reasoning that third-party complaint is to be treated as ordinary civil action complaint);  Middlesex Mutual Assurance Co. v. Black, 40 Conn.Sup. 63, 66, 480 A.2d 614 (1984) (denying motion to strike where ‘third party defendant ․ has been properly impleaded, and where all claims made by ․ the third party plaintiff, arise out of the same transaction complained of in the original complaint, the third party complaint may include claims for damages in excess of those sought in the original complaint’).”   Vitello v. Kaiser Whitney Staffing, Superior Court, judicial district of New Haven, Docket No. CV 08 5018535 (July 9, 2010, Robinson, J.).

The court concludes by rejecting the third-party defendant's argument that “the third party complaint does not and cannot contain any viable allegation of any liability or damages suffered by the third party plaintiffs” because “Lloyd's and Krar have not and will never be held liable for the plaintiff's claims against them, nor have they, or will they, pay any judgment to the plaintiff based on liability.”   This exact argument was made in support of the third-party defendant's motion for summary judgment and rejected by the court in its denial of the motion.³  “New pleadings intended to raise again a question of law which has already been presented on the record and determined adversely to the pleader are not to be favored ․ Where a matter has previously been ruled upon interlocutorily, the court in a subsequent proceeding in the case may treat that decision as the law of the case, if it is of the opinion that the issue was correctly decided, in the absence of some new or overriding circumstance.”  (Citation omitted;  internal quotation marks omitted.)  Breen v. Phelps, 186 Conn. 86, 96, 439 A.2d 1066 (1982).   The defendant in the present action has not provided a new or overriding circumstance.   Furthermore, the court believes that Judge Wilson correctly decided the motion for summary judgment.   It thus treats her decision as the law of the case for the purpose of rejecting the third-party defendant's argument.

For the foregoing reasons, the court denies the third-party defendant's motion to strike in its entirety.

Frechette, J.

FOOTNOTES

FN1. Because United is the only third-party defendant involved in the present motion, the court will refer to it as the third-party defendant hereinafter..  FN1. Because United is the only third-party defendant involved in the present motion, the court will refer to it as the third-party defendant hereinafter.

FN2. Section 10–11 of the Practice Book corresponds and is therefore substantively identical to Section 52–102a..  FN2. Section 10–11 of the Practice Book corresponds and is therefore substantively identical to Section 52–102a.

FN3. Specifically, the third-party defendant made “the argument that [the] claims ․ cannot be the subject of an assignment due to,” inter alia, “the fact that there can be no amount for the [third-party] defendant to reimburse to Lloyd's and Krar because Lloyd's and Krar can no longer be held liable to the plaintiff.”  Starview Ventures v. Acadia Ins. Co., supra, 49 Conn. L. Rptr. 147..  FN3. Specifically, the third-party defendant made “the argument that [the] claims ․ cannot be the subject of an assignment due to,” inter alia, “the fact that there can be no amount for the [third-party] defendant to reimburse to Lloyd's and Krar because Lloyd's and Krar can no longer be held liable to the plaintiff.”  Starview Ventures v. Acadia Ins. Co., supra, 49 Conn. L. Rptr. 147.

Frechette, Matthew E., J.