Barbara Brown v. ACE LLC (2011)

MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT, No. 122

FACTS

On January 25, 2010, the plaintiffs, Barbara and John Brown, filed a twelve-count revised complaint against the defendants, Ace Heating, LLC (Ace Heating), Chelsea Groton Savings Bank (Chelsea Groton) and Allstate Insurance Company (Allstate), alleging the following facts.   On April 8, 2008, the plaintiffs retained Ace Heating to provide service and/or repairs to the heating system/boiler at their home located in Oakdale, Connecticut.   Shortly thereafter, the heating system malfunctioned, causing the boiler to overheat and catch on fire.   As a result, the fire caused substantial damage to the plaintiffs' property.   Counts five through eight are directed towards Chelsea Groton, alleging negligence, breach of contract, negligent infliction of emotional distress and consequential damages.   The plaintiffs allege that Chelsea Groton held a mortgage on the plaintiffs' property at the time of the fire.   The mortgage required that the plaintiffs have insurance coverage on the property.   The plaintiffs were informed by Allstate after the fire that their policy had lapsed for nonpayment of premiums and that notice of the expiration of coverage was sent to Chelsea Groton.   The plaintiffs allege that Chelsea Groton was negligent in failing to notify the plaintiffs of a lapse in insurance coverage and in failing to pay insurance premiums or to secure other insurance for the plaintiffs' property once it knew of the lapse in coverage.   Further, the plaintiffs allege that Chelsea Groton breached the mortgage agreement in failing to inform the plaintiffs of the lapse in coverage.   The plaintiffs also allege that Chelsea Groton's negligence caused emotional distress and consequential damages.

On January 31, 2011, Chelsea Groton filed a motion for summary judgment on all claims asserted against it.   The motion is accompanied by a memorandum of law and several exhibits.   The plaintiffs filed an objection to Chelsea Groton's motion, as well as a memorandum of law in support of their objection and exhibits, on April 6, 2011.

DISCUSSION

“Practice Book § 17–49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.   In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party.”  (Internal quotation marks omitted.)  Sherman v. Ronco, 294 Conn. 548, 553–54, 985 A.2d 1042 (2010).  “In seeking summary judgment, it is the movant who has the burden of showing the nonexistence of any issue of fact.   The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to a judgment as a matter of law.   The courts hold the movant to a strict standard.”  Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 10–11, 938 A.2d 576 (2008).  “[T]he ‘genuine issue’ aspect of summary judgment requires the parties to bring forward before trial evidentiary facts, or substantial evidence outside the pleadings, from which the material facts alleged in the pleadings can warrantably be inferred ․ A material fact has been defined adequately and simply as a fact which will make a difference in the result of the case.”  (Citation omitted;  internal quotation marks omitted.)  Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 556, 791 A.2d 489 (2002).  “Mere assertions of fact ․ are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court [in support of a motion for summary judgment].”  (Internal quotation marks omitted.)  Gold v. East Haddam, 290 Conn. 668, 678, 966 A.2d 684 (2009).

In the present case, Chelsea Groton argues that it is entitled to judgment as a matter of law with respect to each claim against it and that there are no material facts in dispute.   Specifically, Chelsea Groton asserts that it owed no duty to the plaintiffs to notify them of the lapse in their insurance or to pay the premiums on behalf of the plaintiffs.   Further, Chelsea Groton argues that it did not breach the mortgage agreement;  rather, the contract expressly absolves it of any liability, and therefore, the rest of the claims against it must fail as well.   In response, the plaintiffs contend that genuine issues of material fact exist with respect to each count asserted against Chelsea Groton and also that Chelsea Groton is improperly challenging the legal sufficiency of their complaint by way of a motion for summary judgment rather than a motion to strike.   The plaintiffs assert that certain provisions of the open end mortgage are ambiguous, thus making summary judgment inappropriate.

The evidence presented both in support and in opposition of summary judgment reveals the following.   On October 10, 2003, the plaintiffs issued an open end construction mortgage on their property to Chelsea Groton.   Paragraph five of the mortgage agreement states in relevant part:  “Borrower shall keep the improvements now existing or hereafter erected on the property insured against loss by fire ․ The insurance carrier providing the insurance shall be chosen by Borrower subject to Lender's right to disapprove Borrower's choice, which right shall not be exercised unreasonably.”  (Emphasis added.)   Paragraph five also states:  “If Borrower fails to maintain any of the coverages described above, Lender may obtain insurance coverage, at Lender's option and Borrower's expense.   Lender is under no obligation to purchase any particular type or amount of coverage.   Therefore, such coverage shall cover Lender, but might or might not protect Borrower, Borrower's equity in the Property, or the contents of the Property, against any risk, hazard or liability and might provide greater or lesser coverage than was previously in effect.”  (Emphasis added.)

On October 2, 2003, the plaintiffs purchased an insurance policy from Allstate to protect against, inter alia, fire damage.   On July 24, 2004, both the plaintiffs and Chelsea Groton received separate letters from Allstate informing them in writing that the insurance policy would terminate as of October 2, 2004, because “[t]he construction of [the plaintiffs'] dwelling was not completed within the required 365 days.”

Nearly four years after the termination of insurance coverage, the plaintiffs sustained a fire loss on their property on April 8, 2008.

The plaintiffs contend that a genuine issue of material fact exists that renders summary judgment on all claims against Chelsea Groton to be inappropriate.   They argue that they were under the belief that their monthly mortgage payments included funds that were applied to the insurance premiums, pursuant to paragraph three of the mortgage agreement.¹  This mere factual assertion, however, is belied by the evidence presented by Chelsea Bank. In two affidavits, Judith Stumpo, a vice president of Chelsea Groton, states that the plaintiffs were never charged insurance premiums by Chelsea Groton nor did they pay insurance premiums directly to Chelsea Groton.   Further, Stumpo states that the plaintiffs were provided with written notice waiving their obligation to escrow funds for insurance by way of an individual escrow account disclosure statement signed by the plaintiffs.   Chelsea Groton also attached as an exhibit a letter from Allstate addressed to Chelsea Groton informing the latter of the plaintiffs' insurance policy on the mortgaged property.   The “Messages” section of the policy summary states:  “Do not pay.   Insured has been billed.”

Therefore, Chelsea Groton has produced undisputed evidence that the plaintiffs were required to obtain insurance that included coverage for fire liability, that Chelsea Groton was not required to obtain insurance or to protect the plaintiffs or their interest in the property, that Allstate billed the plaintiffs for their insurance policy, that the plaintiffs received notification from Allstate that their insurance policy would be terminated and that Chelsea Groton waived the plaintiffs' obligation to escrow insurance funds and never collected insurance premiums as part of the plaintiffs' monthly mortgage payment.

With this backdrop in place, the court will address each claim asserted against Chelsea Groton in turn.

A. Count Five—Negligence

“The essential elements of a cause of action in negligence are well established:  duty;  breach of that duty;  causation;  and actual injury.”   (Internal quotation marks omitted.)  Sturm v. Harb Development, LLC, 298 Conn. 124, 139, 2 A.3d 859 (2010).   Chelsea Groton argues that it was under no duty to the plaintiffs to maintain or secure an insurance policy on their behalf.   The plaintiffs maintain that Chelsea Groton had a duty to notify them that their insurance lapsed.  “Generally there exists no fiduciary relationship merely by virtue of a borrower lender relationship between a bank and its customer.”  Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 19, 728 A.2d 1114, cert. denied, 249 Conn. 919, 733 A.2d 229 (1999).  “A lender has the right to further its own interest in a mortgage transaction and is not under a duty to represent the customer's interest.”  Id. The mortgage agreement is clear in requiring the plaintiffs to maintain insurance on the property, while permitting Chelsea Groton, as its own option, to obtain insurance in the event the plaintiffs fail to do so.   The mortgage specifically states that Chelsea Groton is under no obligation to purchase insurance on its own and warns that any such coverage might not protect the plaintiffs or their property from any risk or liability.   Further, Chelsea Groton has provided evidence that the plaintiffs received written notice of their own from Allstate that their insurance would not be renewed and that the plaintiffs received written notice that Chelsea Groton waived their obligation to pay it any insurance premiums in escrow.   Therefore, Chelsea Groton has met its burden of establishing that there are no genuine issues of material fact regarding the absence of a duty owed to the plaintiffs and have shown that it is entitled to judgment, as a matter of law with respect to the negligence claim in count five of the complaint.

B. Count Six—Breach of Contract

The plaintiffs also allege that Chelsea Groton's failure to notify the plaintiffs of a lapse of insurance coverage and to secure other insurance for the plaintiffs' property constituted a breach of contract.   Chelsea Groton argues that the plain language of the contract belies the plaintiffs' claim, while the plaintiffs contend that ambiguity in the mortgage agreement creates a genuine issue of material fact.   According to the Supreme Court, “[a] contract must be construed to effectuate the intent of the parties, which is determined from the language used interpreted in the light of the situation of the parties and the circumstances connected with the transaction ․ The intent of the parties is to be ascertained by a fair and reasonable construction of the written words and ․ the language used must be accorded its common, natural, and ordinary meaning and usage where it can be sensibly applied to the subject matter of the contract ․ Where the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms.   A court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity ․ Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party's subjective perception of the terms.”  (Internal quotation marks omitted.)   Poole v. Waterbury, 266 Conn. 68, 87–88, 831 A.2d 211 (2003).  “The mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous.”   (Internal quotation marks omitted.)  United Illuminating Co. v. Wisvest–Connecticut, LLC, 259 Conn. 665, 670, 791 A.2d 546 (2002).

In the present case, as discussed above, the clear and unambiguous language of the mortgage agreement between the plaintiffs and Chelsea Groton, by use of the word “shall,” requires that the plaintiffs obtain insurance for the property and that the plaintiffs choose the insurance carrier.   In contrast, by use of the word “may,” Chelsea Groton was not required to obtain insurance on its own if the plaintiffs failed to do so and it was not required to protect the plaintiffs or their equity in or contents of the property.   The plaintiffs' incorrect belief that their mortgage payments included a fee for insurance premiums is not supported by any evidence presented before the court and does not create any ambiguity in the contract.   Their unreasonable contention that they thought that Chelsea Groton was paying for their property insurance for the four years before the fire is contradicted by the plain language of the mortgage agreement requiring the plaintiffs to obtain insurance on their own, the notification letter sent by Allstate to the plaintiffs in 2004 alerting them that their policy was not going to be renewed, and the affidavit by the vice president of Chelsea Groton swearing that the plaintiffs received written notification of Chelsea Groton's waiver of the requirement of paying insurance premiums, assessments and other fees into an escrow account each month.   For these reasons, Chelsea Groton has shown that there are no genuine issues of material fact with respect to the plaintiffs' breach of contract claim, and it is entitled to judgment as a matter of law.

C. Count Seven—Negligent Infliction of Emotional Distress

Chelsea Groton moves for summary judgment on the seventh count of the complaint on the grounds that a claim for negligent infliction of emotional distress is predicated on a successful claim for negligence and that because the negligence claim fails as a matter of law, so does the emotional distress claim.   Chelsea Groton also contends that a claim for negligent infliction of emotional distress based solely on damage to real property is not recognized in this state.   In response, the plaintiffs dispute the arguments that negligence is a required element of this count and that an emotional distress claim cannot be brought for damages to real property;  the plaintiffs argue, without submitting or pointing to any evidence before the court, that genuine issues of material fact exist with respect to this count.

According to the Supreme Court, “in order to prevail on a claim of negligent infliction of emotional distress, the plaintiff must prove that the defendant should have realized that its conduct involved an unreasonable risk of causing emotional distress and that that distress, if it were caused, might result in illness or bodily harm ․ We repeatedly have endorsed this requirement of foreseeability ․ As we previously have observed, this condition differs from the standard foreseeability of the risk of harm requirement for negligence liability generally in that it focuses more precisely upon the nature of the harm to be anticipated as a prerequisite to recovery even [when] a breach of duty might otherwise be found.”  (Citations omitted;  internal quotation marks omitted.)  Scanlon v. Connecticut Light & Power Co., 258 Conn. 436, 446–47, 782 A.2d 87 (2001).

Thus, while an underlying negligence claim is not required for a successful negligent infliction of emotional distress claim, there is an overlapping element of foreseeability in both claims.   In concluding that there are no genuine issues of material fact concerning the conclusion that Chelsea Groton does not owe a duty to the plaintiffs to notify them of their insurance lapse or to provide insurance on its own, this court impliedly held that it was not reasonably foreseeable that Chelsea Groton's conduct would lead to harm the plaintiffs.   The Supreme Court's discussion of the distinction between the foreseeability required for negligence compared to negligent infliction of emotional distress in Scanlon v. Connecticut Light & Power Co., supra, 258 Conn. 446–47, suggests that the foreseeability required for the latter is actually more stringent than the former.   The evidence put forth by Chelsea Groton satisfies its summary judgment burden showing there are no genuine issues of material fact that its conduct did not involve an unreasonable risk of causing emotional distress and it was not foreseeable that such distress would result.   The nature of the lender-borrower relationship between the plaintiffs and Chelsea Groton, coupled with the clear language of the mortgage agreement as discussed earlier in this opinion, support this conclusion.

D. Count Eight—Consequential Damages

Count eight does not state a separate cause of action;  instead, it asserts a claim for consequential damages that are derivative of the other claims asserted against Chelsea Groton.  “The Restatement (Second) of Contracts divides a defendant's recovery into two components:(1) direct damages, composed of the loss in value to him of the other party's performance caused by its failure or deficiency ․ plus, (2) any other loss, including incidental or consequential loss, caused by the breach ․ [D]amages resulting from a breach of contract may be divided into those which flow naturally and usually from the breach itself or general damages, and those which do not naturally and usually flow from such a breach, but did in this case, or special or consequential damages.   As to the former, the parties need not actually have considered the possibility of their occurrence, as long as they may fairly be supposed to have considered them, while, as to the latter, to be recoverable, they must meet the requirements of causation, certainty, and foreseeability, that is, be such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract ․ Consequential damages ․ include those damages that ․ were reasonably foreseeable or contemplated by the parties at the time the contract was entered into as a probable result of a breach.”   (Citations omitted;  internal quotation marks omitted.)  Milford v. Coppola Construction Co., 93 Conn.App. 704, 714–15, 891 A.2d 31 (2006).

Because this court has already concluded summary judgment will be granted in favor of Chelsea Groton for the other claims, based in part on the finding that the plaintiffs' alleged injuries were not reasonably foreseeable to Chelsea Groton, there is therefore no genuine issue of material fact concerning the foreseeability of any consequential damages.   For the same reasons discussed above, Chelsea Groton has met its burden of establishing it is entitled to judgment as a matter of law with respect to the consequential damages claim.

F. The Plaintiffs' Procedural Argument Against Summary Judgment

Finally, the court will address the plaintiffs' argument that Chelsea Groton has challenged the legal sufficiency of the claims against it and should have filed a motion to strike rather than a motion for summary judgment.   Our Supreme Court has recognized that “the use of a motion for summary judgment instead of a motion to strike may be unfair to the nonmoving party because [t]he granting of a defendant's motion for summary judgment puts the plaintiff out of court ․ [while the] granting of a motion to strike allows the plaintiff to replead his or her case.”  (Internal quotation marks omitted.)   American Progressive Life and Health Ins. Co. of New York v. Better Benefits, LLC, 292 Conn. 111, 121, 971 A.2d 17 (2009).   Nevertheless, “the use of a motion for summary judgment to challenge the legal sufficiency of a complaint is appropriate when the complaint fails to set forth a cause of action and the defendant can establish that the defect could not be cured by repleading ․ If it is clear on the face of the complaint that it is legally insufficient and that an opportunity to amend it would not help the plaintiff, we can perceive no reason why the defendant should be prohibited from claiming that he is entitled to judgment as a matter of law and from invoking the only available procedure for raising such a claim after the pleadings are closed.”   (Citation omitted.)  Larobina v. McDonald, 274 Conn. 394, 401–02, 876 A.2d 522 (2005).

The uncontroverted evidence submitted by Chelsea Groton, namely the mortgage agreement, the notification of non-renewal letter sent from Allstate to the plaintiffs and the affidavits from a Chelsea Groton vice president, conclusively establish that no amount of repleading could cure the plaintiffs' claims against Chelsea Groton.

CONCLUSION

For the foregoing reasons, the court hereby grants the defendant Chelsea Groton Savings Bank's motion for summary judgment with respect to counts five, six, seven and eight of the plaintiffs' revised complaint.

Cosgrove, J.

FOOTNOTES

FN1. Paragraph three of the mortgage agreement provides in relevant part:  “Borrower shall pay to Lender on the day Periodic Payments are due under the Note ․ a sum (the “Funds”) to provide for payment of amounts due for ․ (c) premiums for any and all insurance required by Lender under Section 5 ․ unless Lender waives Borrower's obligation to pay the Funds for any or all Escrow Items.   Lender may waive Borrower's obligation to pay to Lender Funds for any or all Escrow Items at any time.   Any such waiver may only be in writing.”.  FN1. Paragraph three of the mortgage agreement provides in relevant part:  “Borrower shall pay to Lender on the day Periodic Payments are due under the Note ․ a sum (the “Funds”) to provide for payment of amounts due for ․ (c) premiums for any and all insurance required by Lender under Section 5 ․ unless Lender waives Borrower's obligation to pay the Funds for any or all Escrow Items.   Lender may waive Borrower's obligation to pay to Lender Funds for any or all Escrow Items at any time.   Any such waiver may only be in writing.”

Cosgrove, Emmet L., J.