Jolanta Dadura et al. v. NGM (2011)

MEMORANDUM OF DECISION RE MOTON TO STRIKE, # 106

I

FACTS and PROCEDURAL BACKGROUND

The plaintiffs, Jolanta Dadura and Rafal Kosciusziewicz, bring a four-count complaint against the defendant, NGM Insurance Company (NGM), in which they allege the following facts.   The plaintiffs owned property known as 77 Winthrop Street, New Britain, Connecticut.   NGM insured the property.   On June 21, 2009, the plaintiffs filed a claim with NGM, alleging that they suffered damage to their property as a result of the collapse of a retaining wall.   On June 29, 2009, NGM advised the plaintiffs that the coverage was denied by sending them a form letter, which letter cited numerous exclusions to coverage, some of which were not germane to the plaintiffs' specific claim.

The plaintiffs commenced this action against NGM by complaint dated April 1, 2010, asserting four causes of action against the defendant.   The first count alleged breach of contract;  the second count alleged violations of Connecticut Unfair Insurance Practices Act (CUIPA) and the Connecticut Unfair Trade Practices Act (CUTPA);  the third count alleged bad faith;  and the fourth count alleged negligent infliction of emotional distress.

On May 11, 2010, the defendant filed a motion to strike the second and third counts of the complaint, and rather than respond to the motion to strike, the plaintiffs filed a request for leave to amend their complaint.   The amended complaint changed the order of the counts, but made few substantive changes, and the defendant objected to the request to amend, which objection was overuled.¹

On September 28, 2010, the defendant brought a motion to strike the third count of the amended complaint and the corresponding claims for relief.   In count three, the plaintiffs allege the defendant violated the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a–816(6),² and the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42–110a et seq.   They allege the defendant has violated CUIPA in that it has:  (a) misrepresented pertinent facts or insurance policy provisions to coverage for Connecticut insureds;  (b) failed to reasonably and promptly investigate policy claims arising under the insurance policies;  (c) refused to pay claims without conducting reasonable investigations based upon all available information;  (d) failed to effectuate prompt, fair and equitable settlements of claims in which liability had become reasonably clear;  (e) compelled insurers to institute litigation to recover amounts due under their insurance policies;  and (f) failed to promptly provide reasonable explanations bases on (sic) the insurance policies.” ³  Count Three, ¶ 20.

The defendant's motion to strike count three of the plaintiffs' complaint for CUIPA/CUTPA asserts that the plaintiffs alleged only facts which related to the plaintiffs' claim that is the subject of this action, and did not allege that the defendant engaged in the alleged misconduct in the handling of other policyholders' claims, nor did they allege a pattern of misconduct in violation of CUIPA and CUTPA.   A memorandum of law was also filed in support of the motion to strike, and the plaintiffs filed their opposition on March 23, 2011.   This court heard argument on March 28, 2011.

II

DISCUSSIONA. Motion to Strike Standard

“[A] party may challenge the legal sufficiency of an adverse party's claim by filing a motion to strike.”  Vertex v. Waterbury, 278 Conn. 557, 564, 898 A.2d 178 (2006).  Practice Book § 10–39 provides that “(a) Whenever any party wishes to contest (1) the legal sufficiency of the allegations of any complaint, counterclaim or cross claim, or of any one or more counts thereof, to state a claim upon which relief can be granted, or (2) the legal sufficiency of any prayer for relief in any such complaint, counterclaim or cross complaint ․ that party may do so by filing a motion to strike the contested pleading or part thereof.  “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).  “A motion to strike admits all facts well pleaded;  it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings.”  (Emphasis in original;  internal quotation marks omitted.)  Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997).

B. Count Three:  CUTPA/CUIPA

The plaintiffs maintain that they properly allege a CUTPA violation premised on CUIPA in that the complaint alleges action by the defendant constituting the alleged violation of CUTPA.   They point to the allegations in the complaint that the form letter employed by the defendant is part of its overall business practice of denying legitimate claims.

The defendant argues that the plaintiffs' CUIPA/CUTPA claim should be stricken, because they have failed to allege that the defendant engaged in the allegedly wrongful conduct in the handling of claims of other policy holders, nor did they allege a pattern of misconduct in violation of CUIPA and CUTPA.   Specifically, the plaintiffs alleged that “the defendant sent a form letter to the plaintiffs citing numerous exclusions to coverage that were not germane to the matter at hand.”   Count three, ¶ 19 They went on to state that “[i]t is clear that the letter employed by the defendant is sent to all of the defendant's insureds as part of its overall business practice of denying legitimate claims.”  (Emphasis added.)  Id. In essence, the defendant argues that the plaintiffs have not alleged any additional instances of improper conduct that transcend their individual claim.   The defendant provides case law to support its position that because the plaintiffs have not attempted to plead a factual basis establishing other specific instances of improper conduct, the allegations regarding general business practice are legally insufficient.   Moreover, the defendant argues that the use of the conclusionary statement that “it is clear” that the defendant uses a form letter does not provide the factual specificity sufficient to support an important element of the cause of action.   The court agrees.

“[A] CUTPA claim based on an alleged unfair claim settlement practice ․ require[s] proof, as under CUIPA, that the unfair settlement practice ha[s] 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).   Our Supreme Court has held that “claims of unfair settlement practices under CUIPA require a showing of more than a single act of insurance misconduct.”  Mead v. Burns, 199 Conn. 651, 659, 509 A.2d 11 (1986).  “In requiring proof that the insurer has engaged in unfair claim settlement practices ‘with such frequency as to indicate a general business practice,’ the legislature has manifested a clear intent to exempt from coverage under CUIPA isolated instances of insurer misconduct.”  Lees v. Middlesex Ins. Co., supra, 229 Conn. 849.

A split of authority exists regarding the degree of specificity required when pleading a general business practice under CUIPA to survive a motion to strike.   One line of cases, cited by the defendant, requires that the plaintiff plead specific facts to demonstrate acts of insurer misconduct that go beyond the plaintiff's immediate claim.   In Starview Ventures, LLC v. Acadia Ins., Superior Court, judicial district of New Haven, Docket No. CV 06 5003463 (October 17, 2006), the plaintiff brought, inter alia, a CUTPA claim against the defendant, its insurer, arising in part out of its alleged refusal to pay the full amount of the losses resulting from fire damage to plaintiff's building.   The plaintiff alleged that the defendant's conduct toward it evidenced a “general business practice” of engaging in unfair settlement practices.   The defendant moved to strike, because, among other reasons, when a CUTPA claim relies on unfair settlement practices, the conduct must amount to a violation of CUIPA and that CUIPA requires proof of more than a single instance of conduct.

The court agreed with the defendant that a CUTPA claim based on unfair insurance practices must be a violation of CUIPA.   The court followed the majority position and held that the pleader must allege multiple specific acts of misconduct from which a “general business practice” could be inferred.   The court reasoned that to do the opposite would effectively permit a litigant to “override ․ [the] CUIPA regulatory pattern ․” The plaintiff had failed to sufficiently allege a cause of action, because its allegations of misconduct arise from the same single insurance policy that is applicable only to the plaintiff and the defendant.   See, also Carrol v. Allstate Ins. Co., Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. CV 98 0164867 (June 15, 1999) (court found plaintiff's allegation that “upon information and belief the defendant had a general business practice of denying fire damage claims submitted by its insureds” was conclusory and failed to allege specific facts establishing more than one instance of the alleged misconduct in order to state a “general business practice”);  Gold v. American Economy Insurance, Superior Court, judicial district of New Haven, Docket No. CV 95 0380475 (June 23, 1998) [22 Conn. L. Rptr. 349] (plaintiff's failure to allege anything other than defendant mishandled her claim was insufficient to support allegations of a “general business practice”);  Alers v. Berkley Administrators of Connecticut, Inc., Superior Court, judicial district of Fairfield, Docket No. CV 04 4003705 (July 22, 2005) (plaintiff's allegations that defendant's practices “were committed against claimants, including the plaintiff with such frequency as to indicate a general business practice” was insufficient to support a direct action under CUIPA as well as an action under CUTPA on the basis of defendant's alleged unfair settlement practices);  Currie v. Aetna Casualty & Surety Company, Superior Court, judicial district of New Britain, Docket No. CV 96 0558900 (August 12, 1999) (court finding the following allegation to be conclusory, and providing no factual basis for a necessary element of the CUIPA claim:  “have continued to commit the acts referred to above as to the plaintiffs, Timothy Currie and Kimberly Currie, and as to other insureds and policy holders of the defendants or the defendants' holding companies, affiliates, or subsidiaries with such frequency as to constitute a general business practice”) (emphasis added);  Ciarleglio v. Fireman's Fund Ins. Co., Superior Court, judicial district of Fairfield, Docket No. CV 90 0276028 (December 17, 1993) [10 Conn. L. Rptr. 579] (“The plaintiff has inserted the magic words of other acts of insurance misconduct by the defendant, although not stating the factual basis for that claim.   However, on a motion to strike, legal conclusions are not admitted”) (emphasis added);  National Publishing Company, Inc. v. Hartford Fire Ins. Co., Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. CV 97 0156478 (March 25, 1998) (court finding “the plaintiff has enumerated the alleged reasons that the defendant rejected its claim or claims involving only one particular loss,” and such allegations “do not amount to allegations of conduct occurring ‘with such frequency as to indicate a general business practice’) (emphasis added);  Jones v. Safeco Ins. Co. of Illinois, Superior Court, judicial district of Fairfield, Docket No. CV 98 0357614 (April 28, 1999) (“[T]he plaintiff's case arises out of a single automobile collision.   The plaintiff alleges only a failure to settle her claim.   The plaintiff's allegations ․ that the defendant's conduct ‘is a general business practice’ is a mere legal conclusion”).

However, other Superior Courts have held, essentially, that as long as the plaintiff alleges that the insurer misconduct involves other insureds, pleading specific instances of such misconduct is not required.   In Nation v. Allstate Insurance Co., Superior Court, judicial district of Litchfield, Docket No. CV 04 0093456 (September 7, 2005) (39 Conn. L. Rptr 886, 887), the plaintiff alleged that “on information and belief, Allstate has engaged in a course of conduct constituting a general business practice of failing to make reasonable examinations of its insureds' casualty damages, denying its insureds' casualty claims, and failing to make good faith efforts to settle claims.”   The court held that it “is aware that there 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 that [S]uperior [C]ourt decisions are split on this issue.   Given the remedial nature of CUIPA and given that it is to be liberally construed to give effect to the legislature's intent, the court holds that the allegation of a general business practice in the plaintiff's complaint is sufficient to withstand a motion to strike.”   In Lamour v. Allstate Ins. Co., Superior Court, judicial district of Ansonia–Milford, Docket No. CV 95 9034 (February 15, 1995) [13 Conn. L. Rptr. 496], the court found that the plaintiff's allegation “that the defendant has made it a general business practice to undervalue claims and require its insureds to file suit” is sufficient to withstand a motion to strike.  (Emphasis added).

In Active Ventilation Products, Inc. v. Property & Casualty Ins. Co. of Hartford, Superior Court, judicial district of Hartford, Complex Litigation Docket at Hartford, Docket No. X09 085023757 the court denied the defendant's motion to strike the plaintiff's claim for a violation of CUTPA through CUIPA.   The court held that “an allegation of a general business practice, unsupported by specific instances of insurer misconduct, is sufficient to withstand a motion to strike [a CUTPA claim based on CUIPA].”   The plaintiff in that case alleged more than one claim.   Specifically, it “alleged in its complaint that the acts or omissions of the [defendant] in dealing with its claims, ‘to [the plaintiff's] knowledge and belief,’ are the Hartford's ‘general business practice;’ ․ more particularly, the Hartford's delay in processing Active Ventilation's claims, ‘[t]o the knowledge and belief of ․ Active Ventilation, ․ occur[s] with such frequency as to constitute a general business practice of the ․ Hartford ․’ “ (Emphasis added.)  Id.

In Massotti v. Allstate Ins. Co., Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. CV 02 0192061 (May 16, 2003) (34 Conn. L. Rptr. 615, 615), the court found that the allegations that the defendant has “violated CUIPA by engaging in unfair settlement practices, including failure to reply to her claim within a reasonable time, failing to conduct a reasonable investigation, and that the ‘frequency’ of the defendant's conduct in handling similar claims ‘with both this plaintiff as well as others' constituted ‘a general business practice’ “were sufficient to survive a motion to strike.  (Emphasis added.)

In a previous case, this court followed the second line of cases and denied a motion to strike, stating that specific instances of unfair claims practices as to other insured are not required to survive a motion to strike for failure to allege a general business practice.   In Wirth v. Progressive Casualty Insurance Company, Superior Court, judicial district of New Britain at New Britain, Docket No. CV 09–5012844 (January 14, 2010) [49 Conn. L. Rptr. 211], the plaintiff alleged defendant engaged in unfair claim settlement practices by “refusing to pay claims without conducting a reasonable investigation based on all information ․ failing to acknowledge and act with reasonable promptness upon communications with respect to claims arising under insurance policies;  failing to adjust, pay and settle insured [s], compelling insureds to institute litigation to recover amounts due under an insurance policy” as well as alleging the “frequency of the defendant's unfair settlement practices, as evidenced in their dealings with both this plaintiff as well as others, indicates a general business practice of the defendant, in violation of CUIPA.”   Moreover, the plaintiff's allegations were not confined to the plaintiff herself, but alleged that the defendant made it a general business practice to require its insured to file suit.

In the present case, however, the plaintiffs' third count does not allege that NGM has treated other claimants unfairly in a manner that constitute a general business practice.   Even construing that count of the complaint in a light most favorable to the nonmoving party, the plaintiffs' allegations merely establish that NGM forwarded what appeared to be a form letter that would have been also forwarded to other claimants.   There are no allegations to substantiate a claim that the alleged unfair settlement practice employed by the defendant in the instant case had been committed or performed by the defendant with such frequency as to indicate a general business practice.   The plaintiffs' conclusory statement that “it is clear” the form letter is sent to all of the defendant's insureds as part of its overall business practice of denying legitimate claims is not an allegation of fact as required by Practice Book § 10–1.⁴

The plaintiffs here do not allege a violation of § 38a–816(6), or any other violation of CUTPA through CUIPA that is legally sufficient to state a CUIPA/CUTPA cause of action.

III

CONCLUSION

For the foregoing reasons, the defendant's motion to strike count three is granted as well as the corresponding claim for relief.

Swienton, J.

FOOTNOTES

FN1. The court (Shortall, J.) in its ruling stated that “issues regarding the sufficiency of the complaint's allegations may be raised via a motion to strike.”.  FN1. The court (Shortall, J.) in its ruling stated that “issues regarding the sufficiency of the complaint's allegations may be raised via a motion to strike.”

FN2. The defendant's brief incorrectly cites the statute as § 39–816(6)..  FN2. The defendant's brief incorrectly cites the statute as § 39–816(6).

FN3. These allegations mirror several of the unfair claim settlement practices set forth in § 38a–816(6)..  FN3. These allegations mirror several of the unfair claim settlement practices set forth in § 38a–816(6).

FN4. The court recognizes that some courts have held that allegations made on “knowledge and belief” to be sufficient allegations of “general practice” and have accepted that language.  Active Ventilation v. Property & Casualty Ins. Co. of Hartford, Superior Court, judicial district of Hartford, Complex Litigation Docket at Hartford, Docket No. X09 085023757;  Southridge Capital Mgt., LLC v. Twin City Fire Ins. Co., Superior Court, judicial district of Middlesex, Complex Litigation Docket No. X 04 CV 02 103527 (June 3, 2005) [39 Conn. L. Rptr. 635];  O'Leary LTD. Partnership v. Travelers Property Casualty Co., Superior Court, judicial district of New London at Norwich, Complex Litigation Docket No. X 04 CV 99–0121281 (April 5, 2001) [29 Conn. L. Rptr. 520].   But see, e.g., Wiacek v. Safeco Ins. Co. of America, Inc., Superior Court, judicial district of Danbury, Docket No. 329601 (March 31, 1998) (court finding that “an allegation based upon ‘reasonable information and belief’ is properly viewed as a legal conclusion, particularly when the plaintiff has made no attempt to plead facts establishing any other instance or instances to demonstrate the frequency of the alleged CUIPA violation”);  Carrol v. Allstate Ins. Co., supra..  FN4. The court recognizes that some courts have held that allegations made on “knowledge and belief” to be sufficient allegations of “general practice” and have accepted that language.  Active Ventilation v. Property & Casualty Ins. Co. of Hartford, Superior Court, judicial district of Hartford, Complex Litigation Docket at Hartford, Docket No. X09 085023757;  Southridge Capital Mgt., LLC v. Twin City Fire Ins. Co., Superior Court, judicial district of Middlesex, Complex Litigation Docket No. X 04 CV 02 103527 (June 3, 2005) [39 Conn. L. Rptr. 635];  O'Leary LTD. Partnership v. Travelers Property Casualty Co., Superior Court, judicial district of New London at Norwich, Complex Litigation Docket No. X 04 CV 99–0121281 (April 5, 2001) [29 Conn. L. Rptr. 520].   But see, e.g., Wiacek v. Safeco Ins. Co. of America, Inc., Superior Court, judicial district of Danbury, Docket No. 329601 (March 31, 1998) (court finding that “an allegation based upon ‘reasonable information and belief’ is properly viewed as a legal conclusion, particularly when the plaintiff has made no attempt to plead facts establishing any other instance or instances to demonstrate the frequency of the alleged CUIPA violation”);  Carrol v. Allstate Ins. Co., supra.

Swienton, Cynthia K., J.