Angelo Reyes v. Nautilus Insurance Company (2012)

MEMORANDUM OF DECISION MOTION TO DISMISS AND MOTION TO STRIKE (# 129)

FACTS

On July 29, 2010, the plaintiffs, Angelo Reyes and New Grand, LLC, filed a summons and complaint against the defendant, Nautilus Insurance Company (Nautilus).   The three-count complaint sounds in breach of contract, breach of covenant of good faith and fair dealing and violations of CUTPA and CUIPA.   The complaint alleges the following facts.   The plaintiffs owned property that was insured by the defendant from December 8, 2008 through December 8, 2009.   There was a fire that caused damage to the property on July 30, 2009, while the policy was in effect.   Despite fulfilling the terms, conditions and requirements of the policy, the defendant has refused to pay for the loss and damages in accordance with the terms of the policy.

On March 4, 2011, the intervening plaintiff, Robert Fishman, Trustee, filed a motion to intervene that was granted by the court.   He filed a four-count intervening complaint sounding in breach of contract, negligence, equitable rights and unjust enrichment on July 26, 2011.   The intervening complaint alleges the following facts.   The intervening plaintiff is the holder of the mortgage secured by the property owned by Reyes.   Pursuant to the terms of the mortgage, Reyes is required to name the intervening plaintiff as the mortgagee on any insurance policy taken out on the property.   The property was insured by the defendant on the date of the fire, July 30, 2009.   Despite demand, the defendant has refused to treat the intervening plaintiff as a mortgagee under the insurance policy.   Moreover, the defendant knew or should have known that the intervening plaintiff was a mortgagee for the property, but failed to name him as a mortgagee on the policy.   As a result of the defendant's actions, the intervening plaintiff has suffered damages and requests, among others, reformation of the insurance policy.

The defendant filed a combined motion to dismiss and motion to strike, with an accompanying memorandum, on August 25, 2011.   It seeks dismissal of count one of the intervening complaint for lack of subject matter jurisdiction on the ground that the intervening plaintiff has no standing in the breach of contract claim because he was not an insured on the date of the fire.   The defendant seeks to strike counts one and two of the intervening complaint as well as the prayer for relief seeking reformation of the policy on the ground of legal insufficiency.

The intervening plaintiff filed a memorandum in opposition on October 18, 2011.   The defendant filed a reply on November 4, 2011.   The matter was heard at short calendar on November 14, 2011.

DISCUSSION

IMOTION TO DISMISS

“A motion to dismiss ․ properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court ․ A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction.”  (Internal quotation marks omitted.)  Caruso v. Bridgeport, 285 Conn. 618, 627, 941 A.2d 266 (2008).  “The motion to dismiss shall be used to assert (1) lack of jurisdiction over the subject matter, (2) lack of jurisdiction over the person, (3) improper venue, (4) insufficiency of process, and (5) insufficiency of service of process.   This motion shall always be filed with a supporting memorandum of law, and where appropriate, with supporting affidavits as to facts not apparent on the record.”  Practice Book § 10–31(a).

“When a trial court decides a jurisdictional question raised by a pretrial motion to dismiss on the basis of the complaint alone, it must consider the allegations of the complaint in their most favorable light ․ In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader.”  (Internal quotation marks omitted.)   Conboy v. State, 292 Conn. 642, 651, 974 A.2d 669 (2009).  “[I]f the complaint is supplemented by undisputed facts established by affidavits submitted in support of the motion to dismiss ․ other types of undisputed evidence ․ or public records of which judicial notice may be taken ․ the trial court, in determining the jurisdictional issue, may consider these supplementary undisputed facts and need not conclusively presume the validity of the allegations of the complaint ․ Rather, those allegations are tempered by the light shed on them by the [supplementary undisputed facts] ․ If affidavits and/or other evidence submitted in support of a defendant's motion to dismiss conclusively establish that jurisdiction is lacking, and the plaintiff fails to undermine this conclusion with counteraffidavits ․ or other evidence, the trial court may dismiss the action without further proceedings ․ If, however, the defendant submits either no proof to rebut the plaintiff's jurisdictional allegations ․ or only evidence that fails to call those allegations into question ․ the plaintiff need not supply counteraffidavits or other evidence to support the complaint, but may rest on the jurisdictional allegations therein.”  (Citations omitted;  emphasis in original;  internal quotation marks omitted.)  Id., 651–52.

“[T]he question of subject matter jurisdiction, because it addresses the basic competency of the court, can be raised by any of the parties, or by the court sua sponte, at any time ․ Moreover, [t]he parties cannot confer subject matter jurisdiction on the court, either by waiver or by consent.”  (Internal quotation marks omitted.)  New Hartford v. Connecticut Resources Recovery Authority, 291 Conn. 511, 518, 970 A.2d 583 (2009).  “The issue of standing implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss.”  (Internal quotation marks omitted.)  May v. Coffey, 291 Conn. 106, 113, 967 A.2d 495 (2009).  “[T]he plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised.”  (Internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n.12, 829 A.2d 801 (2003).  “[I]t is the burden of the party who seeks the exercise of jurisdiction in his favor ․ clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute ․ It is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged.”  (Citation omitted;  internal quotation marks omitted.)  Wilcox v. Webster Ins. Co., 294 Conn. 206, 213–14, 982 A.2d 1053 (2009).

The defendant argues that the intervening plaintiff is “attempting to prosecute a breach of contract claim for a loss that occurred before he had any interest in the [policy].”   It asserts that at the time of the fire, the intervening plaintiff was neither a party to the insurance policy nor a third-party beneficiary of the policy.   Moreover, the defendant maintains, the intervening plaintiff did not have any interest in the policy until October 22, 2009, when he was added first as a loss payee and then as a mortgagee.   As such, the intervening plaintiff has no standing to enforce the policy.

The intervening plaintiff counters that he does have standing to bring a breach of contract action through his rights as a third-party beneficiary as well as through an assertion of his legal and equitable rights.   He notes that though Connecticut courts have not addressed whether an unnamed mortgagee has standing to pursue a breach of contract claim either as a third-party beneficiary or based on a theory of equitable rights, other jurisdictions have done so, and urges the court to do so in this instance.

The defendant responds by refuting the intervening plaintiff's argument that Connecticut courts have not addressed the rights of an unnamed mortgagee, disputing the authority that the intervening plaintiff cites in support of his position and contradicting the intervening plaintiff's argument that an unnamed mortgagee can be considered a third-party beneficiary.

“It is well established that ‘[a] party must have standing to assert a claim in order for the court to have subject matter jurisdiction over the claim ․ Standing is the legal right to set judicial machinery in motion.   One cannot rightfully invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy.’  “ (Internal quotation marks omitted.)  Johnson v. Rell, 119 Conn.App. 730, 735–36, 990 A.2d 354 (2010).

“Standing is no mere procedural technicality.   As the United States Supreme Court has explained, ‘[t]he power to declare the rights of individuals and to measure the authority of governments ․ is legitimate only in the last resort, and as a necessity in the determination of real, earnest and vital controversy’ ․ As a result, ‘[t]he exercise of judicial power, which can so profoundly affect the lives, liberty, and property of those to whom it extends, is therefore restricted to litigants who can show [an injury] resulting from the action which they seek to have the court adjudicate.’  “ (Citation omitted;  internal quotation marks omitted.)  Id., 736.

The defendant argues that the intervening plaintiff had no interest in the insurance contract until three months after the fire, when he was added as a loss payee and then mortgagee, and that he was not a party to the contract.   As a result, the intervening plaintiff was neither a party to nor an intended third-party beneficiary at the time of the fire and, therefore, has no standing to enforce the contract.

The intervening plaintiff disputes the defendant's assertion that he was not a third-party beneficiary to the insurance contract.   In his memorandum in opposition, the intervening plaintiff argues that he has rights as a third-party beneficiary, however, since he does not specify whether his rights stem from his status as an intended third-party beneficiary or an implied third-party beneficiary, the court will address both doctrines.

A.

Intended Third–Party Beneficiary

In general, in order to claim breach of contract, the plaintiff must be a party to the contract.  “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.)  American Express Centurion Bank v. Head, 115 Conn.App. 10, 15–16, 971 A.2d 90 (2009).   Connecticut courts, however, have recognized an exception to this general rule by acknowledging the status of intended third-party beneficiaries.  “A third party beneficiary may enforce a contractual obligation without being in privity with the actual parties to the contract ․ Therefore, a third party beneficiary who is not a named obligee in a given contract may sue the obligor for breach.”  (Citation omitted;  internal quotation marks omitted.)   Rapaport & Benedict, P.C. v. Stamford, 39 Conn.App. 492, 497, 664 A.2d 1193 (1995).

“[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 ․ Although ․ it is not in all instances necessary that there be express language in the contract creating a direct obligation to the claimed third party beneficiary ․ the only way a contract could create a direct obligation between a promisor and a third party beneficiary would have to be, under our rule, because the parties to the contract so intended.”  (Citation omitted;  internal quotation marks omitted.)  Dow & Condon, Inc. v. Brookfield Development Corp., 266 Conn. 572, 580–81, 833 A.2d 908 (2003).  “The requirement that both contracting parties must intend to confer enforceable rights in a third party rests, in part at least, on the policy of certainty in enforcing contracts.   That is, each party to a contract is entitled to know the scope of his or her obligations thereunder.   That necessarily includes the range of potential third persons who may enforce the terms of the contract.   Rooting the range of potential third parties in the intention of both parties, rather than in the intent of just one of the parties, is a sensible way of minimizing the risk that a contracting party will be held liable to one whom he neither knew, nor legitimately could be held to know, would ultimately be his contract obligee.”  (Internal quotation marks omitted.)  Gazo v. Stamford, 255 Conn. 245, 261–62, 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.   To import the concept of foreseeability into the law governing contracts, which is premised on the concept that mutual obligations entered into voluntarily should be enforced, would significantly reduce contracting parties' ability to control, through the negotiated exchange of promises and consideration, the scope of their contractual duties and obligations.”  (Internal quotation marks omitted.)  Id., 267.  “Foreseeability in the law of torts is a useful concept in defining the circumstances under which a duty may arise to protect others against a particular harm ․ It is not, however, a sufficient basis for establishing a contractual relationship.”  (Citation omitted.)  Grigerik v. Sharpe, 45 Conn.App. 775, 788, 699 A.2d 189 (1997), rev'd on other grounds, 247 Conn. 293, 721 A.2d 526 (1998).   Thus, “one who [is] neither a party to a contract nor a contemplated beneficiary thereof cannot sue to enforce the promises of the contract ․ [I]f the plaintiff is neither a ‘party’ to, nor a contemplated beneficiary of [a contract], she lacks standing to bring her claim for breach of the agreement.”  (Citations omitted;  internal quotation marks omitted.)  Tomlinson v. Board of Education of Bristol, 226 Conn. 704, 718, 629 A.2d 333 (1993).

In the present case, the gravamen of the dispute between the intervening plaintiff and the defendant is whether the intervening plaintiff was an intended third-party beneficiary prior to the fire.   The intervening plaintiff alleges in the breach of contract count that he is a mortgagee of property owned by the plaintiffs and that pursuant to the mortgage, Reyes was required to name the intervening plaintiff as the mortgagee on any insurance policy taken out to protect the property.   He further alleges that the defendant knew or should have known that he was a mortgagee for the insured property, but that it failed to treat the intervening plaintiff as a mortgagee under the insurance policy.   The defendant submitted endorsements that added the intervening plaintiff first as a loss payee, then as a mortgagee, effective October 22, 2009.

Considering the allegations in the light most favorable to the intervening plaintiff, the court can infer that Reyes intended that the intervening plaintiff would be an intended third-party beneficiary prior to the fire.   The allegation that the defendant knew or should have known that the intervening plaintiff was a mortgagee, however, does not speak to the defendant's intent.   Moreover, the endorsements submitted by the defendant show that it intended to add the intervening plaintiff as a third-party beneficiary effective October 22, 2009, after the date of the fire.   While it is not necessary that an intended third-party beneficiary be in privity with the contracting parties nor even named in a contract in order to have standing to bring a claim for breach of contract, the endorsements are the only evidence submitted to the court regarding the defendant's intentions.

Thus, even indulging in every presumption favoring jurisdiction, the intervening plaintiff has failed to “allege facts demonstrating that he is a proper party to invoke judicial resolution.”  Wilcox v. Webster Ins. Co., supra, 294 Conn. 213.   The intervening plaintiff does not allege facts that demonstrate that he was an intended third-party beneficiary to the contract between the plaintiffs and the defendant because he has not alleged that the plaintiffs and the defendant intended that the defendant would have a direct obligation to him at any time prior to the fire.   There are no allegations that would allow the court to infer the intent of the defendant at the time of the making of the insurance policy and the intervening plaintiff has provided no evidence to undermine the defendant's evidence that their intent was to add him as a mortgagee effective October 22, 2009.   Though the intervening plaintiff did allege that the mortgage documentation requires the plaintiff to name the intervening plaintiff when procuring insurance, without more, the court cannot make the necessary inference that he was an intended third-party beneficiary.

B.

Implied Third–Party Beneficiary

The court now turns to the intervening plaintiff's implied third-party beneficiary argument.   The intervening plaintiff cites Stewart–Smith Haidinger, Inc. v. Avi–Truck, Inc., 682 P.2d 1108 (Alaska 1984), to support his argument that he can bring a breach of contract action as an implied third-party beneficiary against the defendant.   In that case, Trans–Northern Aleutian, Inc. (TNA), an air transport company, leased a plane from the defendant, a company formed in order to purchase the plane.  Id. TNA insured the plane for the purpose of transportation both prior to and after the defendant purchased it, but did not add the plane to its fleet policy until one week after the plane crashed.  Id., 1111.   After being sued by a creditor, the defendant brought a third-party complaint against the plaintiff, alleging that it was entitled to the proceeds of the insurance policy.  Id. On a motion for summary judgment, the trial court held that the defendant had standing to sue the plaintiff as a third-party beneficiary.  Id. The Alaska Supreme Court affirmed.  Id., 1114.   It stated that “[b]efore a third party right in a contract will be recognized, the parties to the contract must intend that at least one purpose of the contract is to benefit a third party ․ Since [the defendant] did not exist when the contract was initially negotiated, we cannot find that the parties specifically intended that [the defendant] would benefit from it.”  (Citation omitted.)  Id., 1112.   The court went on to note with approval, however, that “the [trial] court concluded that, under the special circumstances of this case, a third-party beneficiary contract should be implied at law.”  Id. The Alaska Supreme Court held that “[the defendant] was within the class of beneficiaries intended by the parties and that its addition as a beneficiary [did] not increase the risk undertaken by [the plaintiff].”  Id., 1114.

Since the Avi–Truck decision, only two states have analyzed Alaska's “implied insured” doctrine in the context of a breach of contract claim.   In Foley's Ice Cream Co. v. American Health & Life Ins., 1989 Me.Super. LEXIS 50, *12 (March 13, 1989), the plaintiff, a family owned ice cream business, purchased life insurance from the defendant insurance companies on each of its principals as additional collateral security in the amount of the mortgage that it had taken out.   After refusing to allow the plaintiff to name the creditor mortgagee as a beneficiary on the policy, one of the defendants, Bankers Security Life Insurance (Bankers) amended the policy to name the plaintiff as the beneficiary and suggested that the plaintiff assign the policy to the creditor mortgagee.  *3 After two unsuccessful attempts to assign the policy, one of the insureds died in an automobile accident.  *3.4 The defendants refused to distribute the proceeds of the policy to the plaintiff and the plaintiff filed suit.  *4 Bankers argued, on a motion for summary judgment, that the true beneficiary of the policy was the creditor mortgagee and that the plaintiff did not have standing to bring the action.  Id.

After reviewing Avi–Truck and relevant Maine case law, the court held that “the plaintiff [had standing] to seek enforcement of the insurance contract in question as an implied third party beneficiary.”  Foley's Ice Cream Co. v. American Health & Life Ins., supra, *12–13.   It noted that “in Maine there is authority for the premise that a third party has standing to enforce a contract which was made at least partly for his benefit if he is a member of a class of beneficiaries entitled to some performance under the contract.”  *10.  Furthermore, “[w]here the owner of an insurance policy furnishes legal consideration by paying the insurance premiums, is a contracting party with the insurance company and will have his mortgage debt reduced by having a mortgagee designated as the recipient of the insurance proceeds, the insurance owner may have standing to enforce the contract despite the fact that the mortgage company was named as the beneficiary.”  *11.  Thus, “there [appeared] to be justification for the implication of a third party beneficiary contract;  [the plaintiff] contracted with Bankers to secure additional collateral for its mortgage obligation, it paid the premiums and stood to have its mortgage debt reduced by payment of the proceeds from the insurance policy, and Bankers recognized that as a practical matter, [the plaintiff] was the beneficiary of the insurance policy by virtue of its statements that it did not issue creditor beneficiary policies and its volitional amendment of the beneficiary to be [the plaintiff].”  *11–12.

The Washington Appellate Court in Postlewait Construction, Inc. v. Great American Ins. Co., 41 Wn.App. 763, 764, 706 P.2d 636 (1985), aff'd, 106 Wn.2d 96, 720 P.2d 805 (1986), also reviewed Avi–Truck and upheld a decision granting a motion for summary judgment which dismissed an action for breach of an agreement to insure.   In that case, the plaintiff, a construction company, leased two of its cranes to a contracting company on the condition that the contractor maintain insurance on the equipment.  Id. The contractor amended its insurance with the defendant insurance company to cover the cranes, but did not add the plaintiff as an additional insured.  Id. After being issued certificates of insurance, the plaintiff cancelled its own insurance on the cranes.  Id., 764–65.   After the cranes were damaged, the plaintiff brought suit for, among others, breach of the insurance agreement.   The Appellate Court, after stating that “[t]he creation of a third-party beneficiary contract requires that the parties intend that the promisor assume a direct obligation to the intended beneficiary at the time they enter the contract”;  (emphasis in original) id., 765;  found that there was no intent between the contractor and the defendant that the defendant assume a direct obligation to the plaintiff.  Id., 766.  “[T]he insurance policy itself evidences no such intent” and “the record contains no evidence that [the defendant] was even aware of the lease [requiring the contractor to maintain insurance on the cranes].  Id., 766–67.   It noted that “a party's desire or purpose to benefit a third party is not the same as an intent to assume a direct obligation to that third party.”  Id., 767.

The Appellate Court also rejected the argument that the court should find a third-party beneficiary contract implied at law.   It distinguished itself from Avi–Truck, noting that “Washington case law holds that the parties must intend to create an obligation to a third party;  we find no Washington authority for the implied at law theory used in Avi–Truck.”  Postlewait Construction, Inc. v. Great American Ins. Co., supra, 41 Wn.App. 768.

The law and reasoning found in Postlewait is persuasive.   Washington and Connecticut's requirement that the intent of both parties is necessary to create a third-party beneficiary is different from Maine's position that “a third party has standing to enforce a contract which was made at least partly for his benefit if he is a member of a class of beneficiaries entitled to some performance under the contract.”  Foley's Ice Cream Co. v. American Health & Life Ins., supra, *10.   Furthermore, just as with the Appellate Court in Postlewait, this court could find no authority in Connecticut to support the “implied insured” doctrine that is used in Avi–Truck.

Foley's Ice Cream is also distinguishable on the facts.   Unlike in Foley's Ice Cream, in the present case, the intervening plaintiff did not allege that he had any communication with the defendant prior to the fire or that he paid any of the premiums on the insurance policy.   There are no allegations or evidence that the defendant even knew of the intervening plaintiff prior to the fire.   Additionally, in this case, as in Postlewait, the original insurance contract does not name the intervening plaintiff as a mortgagee.   Nor has the intervening plaintiff alleged or provided any evidence that the defendant knew about the mortgage and the insurance requirement.

As in Washington State, in Connecticut it is well settled that both parties must intend that the promisor have a direct obligation to the third-party beneficiary.  Grigerik v. Sharpe, supra, 247 Conn. 312.   See also Wasniewski v. Quick and Reilly, Inc., 292 Conn. 98, 971 A.2d 8 (2009);  Stowe v. Smith, 184 Conn. 194, 441 A.2d 81 (1981);  Bryam Lumber & Supply Co. v. Page, 109 Conn. 256, 146 A. 293 (1929);  Baurer v. Devenis, 99 Conn. 203, 212, 121 A. 566 (1923).   The court could find no exceptions to this rule, nor did the intervening plaintiff provide any.   There is no law in Connecticut that supports an implied third-party beneficiary doctrine.   Therefore, the intervening plaintiff cannot prevail on his argument that he is an implied third-party beneficiary who can bring a breach of contract claim.

C.

Equitable Rights

The intervening plaintiff also argues that he has a right to bring a breach of contract action through an assertion of his legal and equitable rights.   He contends that Connecticut has not recognized that an unnamed mortgagee has the right to bring a direct action for an equitable lien of insurance proceeds, even if he is not named on the policy, if it is covenanted in a mortgage or other agreement that the insured procure insurance for the benefit of the third party.   Thus, the intervening plaintiff cites a number of cases from foreign jurisdictions.   He then asserts that these jurisdictions have also found that an “unnamed mortgagee has standing to bring a breach of contract action ․ directly to enforce its equitable rights ․

He is correct in asserting that other jurisdictions have recognized that a third party can bring a direct action against an insurance company for the proceeds due on the policy.   See National Bedding & Furniture Industries, Inc. v. Clark, 252 Ark. 780, 783–85, 481 S.W.2d 690 (1972);  Atwell v. Western Fire Insurance Co., 120 Fla. 694, 702–03, 163 So. 27 (1935);  Marbach v. Gnadl, 73 Ill.App.2d 303, 314–15, 219 N.E.2d 572 (1966);  Winneshiek Mutual Ins. Assn. v. Roach, 257 Iowa 354, 363, 132 N.W.2d 436 (1965);  Taylor v. Audubon Ins. Co., 357 So.2d 912, 914–15, cert. denied, 359 So.2d 1307 (La.Ct.App.1978);  Diaz v. Cherokee Ins. Co., 275 So.2d 922, 925 (La.Ct.App.1973);  McGory v. Allstate Ins. Co., 527 So.2d 632, 640 (Miss.1988);  American Equitable Assurance Co. v. Newman, 132 Mont. 63, 69–70, 313 P.2d 1023 (1957);  Cromwell v. Brooklyn Fire Ins. Co., 44 N.Y. 42, 47 (1870);  Nor–Shire Associates, Inc. v. Commercial Union Ins. Co., 25 App. Div.2d 868, 868, 270 N.Y.S.2d 38 (1966);  Wasserman, Wasserman, Bryan & Landry v. Midwestern Indemnity, Co., 6th Dist. No. L–83–231, 1983 WL 6993, *3 (November 11, 1983);  Cable Communications Network, Inc. v. Aetna Casualty & Surety Co., 838 S.W.2d 947, 950 (Tex.App.1992);  Wade v. Seeburg, 688 S.W.2d 638, 639 (Tex.App.1985);  Farmer's Ins. Exchange v. Nelson, 479 S.W.2d 717, 720 (Tex.Civ.App.1972, writ ref'd n.r.e.).

The cases cited by the intervening plaintiff, however, do not go so far as to support his argument that an “unnamed mortgagee has standing to bring a breach of contract action ․ directly to enforce its equitable rights ․” In fact, the cases cited, either state that the plaintiff is not bringing a claim under a breach of contract theory;  Marbach v. Gnadl, supra, 73 Ill.App.2d 312;  state that the plaintiff has brought an equitable claim;  Wade v. Seeburg, supra, 688 S.W.2d 639;  or do not identify the cause of action;  National Bedding & Furniture Industry v. Clark, supra, 252 Ark. 780;  Taylor v. Audubon Ins. Co., supra, 357 So.2d 912;  Diaz v. Cherokee Ins. Co., supra, 275 So.2d 922;  Cromwell v. Brooklyn Fire Ins. Co., supra, 44 N.Y. 42;  Nor–Shire Associates, Inc. v. Commercial Union Ins. Co., supra, 25 App.Div.2d 868;  Farmer's Ins. Exchange v. Nelson, supra, 479 S.W.2d 717.

Moreover, the intervening plaintiff is mistaken in his assertion that Connecticut does not recognize this right of an unnamed mortgagee to bring a direct action under the theory of equitable lien.   In Webster Bank, NA v. Encompass Ins. Co. of America, Superior Court, judicial district of Litchfield, Docket No. CV 06 5000535 (February 27, 2007, Brunetti, J.) (42 Conn. L. Rptr. 813, 813), the insured mortgagors received a mortgage that required them to name the plaintiff mortgagee as a loss payee.   They failed to do so.  Id. After the mortgagors defaulted on the mortgage, foreclosure proceedings were commenced.  Id. While foreclosure was still pending, the property was damaged in a fire.  Id. Subsequently, the court entered a judgment of strict foreclosure and found a debt due to the plaintiff.  Id. Since the insured mortgagors had obtained a discharge of the debt in a bankruptcy proceeding, the plaintiff could not pursue a deficiency judgment against the insured mortgagors.  Id. Thus, the plaintiff mortgagee filed a complaint against the insurance company and insured mortgagors seeking the proceeds of a fire insurance policy that had been in effect at the time of the fire.  Id. The insurance company filed a motion to dismiss for lack of subject matter jurisdiction arguing that the plaintiff did not have standing because there was no privity of contract and that the claim was premature because the court had not adjudicated the rights between the plaintiff and the insured mortgagors.   Id. The plaintiff countered that it was bringing a claim for an equitable lien, not breach of contract.  Id. The court found that “[t]he plaintiff's claim is not a matter of contract, but rather, a claim of an equitable right.   As such, there is not a requirement of privity between the plaintiff and [the defendant].   The court finds that, as a court of equity, it has subject matter jurisdiction to determine if the plaintiff has an equitable lien on the proceeds of the insurance policy issued by [the defendant], even absent contractual privity.”  Id., 814.

As with the cases in the foreign jurisdictions, though, neither the court in Webster Bank, NA v. Encompass Ins. Co. of America, nor any Superior Court in Connecticut have gone so far as to find that an unnamed mortgagee has a right to bring a breach of contract claim to enforce his equitable rights.   At most, Connecticut recognizes that an unnamed mortgagee can bring a claim of equitable lien.

The intervening plaintiff has not satisfied his burden of proving that he has standing to bring a breach of contract claim against the defendant.   He has not alleged in his intervening complaint or provided evidence to demonstrate that the plaintiffs and the defendant intended to make the intervening plaintiff an intended third-party beneficiary prior to the fire.   There is no law in Connecticut and distinguishable law in other jurisdictions on the issue of whether an unnamed mortgagee can bring a breach of contract action against an insurance company as an implied third-party beneficiary.   Finally, the court could find no authority to support the argument that an unnamed mortgagee can bring a breach of contract action to assert his equitable rights.   While the intervening plaintiff could bring, as he has done in count three, a direct action under a theory of equitable rights, he has no standing to bring a cause of action under the theory of third-party beneficiary or equitable rights.   Accordingly, the defendant's motion to dismiss count one of the intervening complaint is granted.

II

MOTION TO STRIKE

“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).  “Whenever a party wishes to contest (1) the legal sufficiency of the allegations of any complaint ․ 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 that party may do so by filing a motion to strike the contested pleading or part thereof.”  Practice Book § 10–39.  “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).

The court must “construe the complaint in the manner most favorable to sustaining its legal sufficiency.”  (Internal quotation marks omitted.)   American Progressive Life & Health Ins. Co. of New York v. Better Benefits, LLC, 292 Conn. 111, 120, 971 A.2d 17 (2009).  “Moreover ․ [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 the 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).

A

Count One

Since the court has concluded that count one of the intervening plaintiff's complaint should be dismissed for lack of standing, the court will not consider the defendant's motion to strike count one of the intervening complaint.¹

B

Count Two

In count two of the intervening plaintiff's complaint, he alleges that the defendant, “acting through its employees and agents, negligently failed to include [the intervening plaintiff] as a mortgagee on the insurance policy” and that as a result of that negligence, the intervening plaintiff “suffered a loss of collateral for the loan ․” The defendant asserts that count two is legally insufficient because it fails to provide facts that the defendant owed a duty to the intervening plaintiff or that the defendant was the intervening plaintiff's agent.²  Moreover, it avers, the intervening plaintiff's claim that the defendant had a duty to identify and name mortgagees is not supported by Connecticut law.

The intervening plaintiff counters that facts alleging that the defendant's agents acted negligently, that they knew or should have known of the intervening plaintiff's status and that they should have named him in the insurance policy are legally sufficient for the prong of duty.   The defendant responds that the intervening plaintiff cannot establish that he was a foreseeable third-party beneficiary to whom the defendant owed a duty.

The elements for professional negligence are:  (1) the defendant owed the plaintiff a duty, (2) the duty was breached and (3) the breach was the proximate cause of the plaintiff's claimed damages.   See Keeney v. Mystic Valley Hunt Club, 93 Conn.App. 368, 889 A.2d 829 (2006);  Bluefin Mortgage Fund, LLC v. Doyon Ins. Agency, Superior Court, judicial district of New Haven, Docket No. CV 085024631 (December 15, 2010, Corradino, J.T.R.).  “The existence of a duty is a question of law and [o]nly if such a duty is found to exist does the trier of fact then determine whether the defendant violated that duty in the particular situation at hand.”  (Internal quotation marks omitted.)   Precision Mechanical Services, Inc. v. T.J. Pfund Associates, Inc., 109 Conn.App. 560, 564, 962 A.2d 818, cert. denied, 289 Conn. 940, 959 A.2d 1007 (2008).  “Contained within the first element, duty, there are two distinct considerations ․ First, it is necessary to determine the existence of a duty, and [second], if one is found, it is necessary to evaluate the scope of that duty.”  (Internal quotation marks omitted.)  D'Angelo Development & Construction Corp. v. Cordovano, 121 Conn.App. 165, 184, 995 A.2d 79, cert. denied, 297 Conn. 923, 998 A.2d 167 (2010).  “The nature of the duty, and the specific persons to whom it is owed, are determined by the circumstances surrounding the conduct of the individual.”  (Internal quotation marks omitted.)   Precision Mechanical Services, Inc. v. T.J. Pfund Associates, Inc., supra, 564 n.4. “Although it has been said that no universal test for [duty] has ever been formulated ․ our threshold inquiry has always been whether the specific harm alleged by the plaintiff was foreseeable to the defendant ․ Furthermore, [a] duty to use care may arise from a contract, from a statute or from circumstances under which a reasonable person, knowing what he knew or should have known, would anticipate that harm of the general nature of that suffered was likely to result from his act or failure to act.”  (Citation omitted.)  D'Angelo Development & Construction Corp. v. Cordovano, supra, 184.

“The ultimate test of the existence of a duty to use care is found in the foreseeability that harm may result if it is not exercised ․ By that it is not meant that one charged with negligence must be found actually to have foreseen the probability of harm or that the particular injury which resulted was foreseeable, but the test is, would the ordinary man in the defendant's position, knowing what he knew or should have known, anticipate that harm of the general nature of that suffered was likely to result?”  (Citation omitted.)  Orlo v. Connecticut Co., 128 Conn. 231, 237, 21 A.2d 402 (1941).

“The complaint itself must provide the defendant and the Court with notice as to how the doctrine of negligence applies to the plaintiff's claims ․ [T]he facts in the complaint must warrant the application of negligence, bearing in mind that in hindsight, virtually all harms are literally foreseeable ․ For that reason, [i]n every case in which a defendant's negligent conduct may be remotely related to a plaintiff's harm, the courts must draw a line, beyond which the law will not impose legal liability ․ Otherwise, the imperfect vision of reasonable foreseeability would be converted into the perfect vision of hindsight.”   Orthopaedic Specialty Group, P.C. v. Pentec, Inc., Superior Court, complex litigation docket at Stamford, Docket No. X05 CV 10 6008473 (September 13, 2011, Blawie, J.) [52 Conn. L. Rptr. 709].

Connecticut courts have not yet addressed the relationship between an unnamed mortgagee and an insurance company in regards to a negligence claim.   Instructively, however, they have addressed the duty that is owed in various insurance contexts.   On one end of the spectrum is an agent's duty to its insured.   Generally, it has been noted that “[a]n insurance agent has the duty to exercise reasonable skill, care and diligence to see that his client has proper coverage ․'Where he undertakes to procure a policy affording protection against a designated risk, the law imposes upon him an obligation to perform with reasonable care the duty he has assumed.'  “ (Citation omitted.)   Dimeo v. Burns, Brooks & McNeil, Inc., 6 Conn.App. 241, 244, 504 A.2d 557, cert. denied, 199 Conn. 805, 508 A.2d 31 (1986).  “However, once the coverage is procured, the agency relationship with the insured is ended, and the insurance broker has no authority to do anything further unless so authorized by the insured.”   Kohn v. John M. Glover Agency, Superior Court, judicial district of Danbury, Docket No. CV 00 0339053 (April 24, 2001, Adams, J.) [29 Conn. L. Rptr. 377].  “[O]rdinarily, an agent or broker's obligation to his client ends with the placement of a policy unless he either agrees to do certain renewal or other servicing acts or through some understanding or pattern of conduct the insured relies on the agent or broker for that servicing.”  (Internal quotation marks omitted.)  Precision Mechanical Services, Inc. v. T.J. Pfund Associates, Inc., supra, 109 Conn.App. 565, citing 12 E. Holmes, Appleman on Insurance 2d (1999) § 88.4, p. 721.

Connecticut Superior Courts have consistently held that insurance agents, in the absence of a special relationship, do not have an affirmative duty to provide information to an insured after a policy has been issued.   See Precision Mechanical Services Inc. v. T.J. Pfund Associates, Inc., supra, 109 Conn.App. 569–71 (reversing trial court's decision granting summary judgment after finding that there was a question of fact of whether defendant agent maintained a relationship with plaintiff such that he should have informed it of cancellation of policy for nonpayment);  Berlin Corp. v. Continental Casualty Co., Superior Court, judicial district of Hartford, Docket No. CV 06 4021653 (June 2, 2010, Peck, J.) (declining to find that insurance company had affirmative obligation to advise its insured that they were exposed to greater liability after providing insured with requested price quotes for additional insurance);  Kohn v. John M. Glover Agency, supra, Docket No. CV 00 0339053 (denying motion to strike where plaintiffs sufficiently alleged fiduciary or special relationship with defendant such that duty to advise of available insurance coverage and coverage adequacy may arise);  Pitts v. Carabillo, Superior Court, judicial district of Danbury, Docket No. CV 99 0334727 (May 22, 2000, Carroll, J.) (granting motion to strike and finding that insurance agent could not be held liable for canceling insurance policy because there was no duty after insurance was procured);  Grossenbacher v. Ericson Agency, Superior Court, judicial district of Litchfield, Docket No. CV 97 0073518 (April 10, 2000, DiPentima, J.) (granting motion for summary judgment and finding that absent evidence of fiduciary relationship, insurance broker had no duty to advise as to adequate insurance).

Even the statutory duties for insurance companies that provide automobile insurance do not place on them an affirmative duty “to inform or advise the insured regarding all of the policy options available for purchase.”   Bass v. Great American Ins. Co., Superior Court, judicial district of Danbury, Docket No. CV 03 0348341 (August 26, 2004, Richards, J.) (37 Conn. L. Rptr. 754, 755).  “Courts ․ have found no duty on behalf of insurers, under negligence or contract theories, to inform an insured of the availability of increased limits for uninsured motorist coverage or of the availability of conversion coverage ․ ‘Our [insured motorist] statute creates no fiduciary obligations ․ As offeror, [the carrier] had no contractual duty voluntarily to explain the terms of its offer or the advantages and disadvantages to procuring uninsured motorist coverage ․ [T]he insurance company has no duty to explain the advantages or disadvantages of uninsured motorist protection to the insureds.   The defendant also has no duty to recommend coverage to the insureds.’  “ (Citations omitted;  emphasis in original.)  Id.

Thus, the duty of an insurance agent or company to its insured is limited to the initial procurement of appropriate coverage.   The duty does not extend to other areas of the insurance contract, nor does it continue once the insurance has been obtained, unless there is a fiduciary or special relationship between the agent or company and the insured.

On the other end of the spectrum is an insurer's duty to a third-party claimant.   The court in J.P. Morgan Chase Medical Benefits Plan v. Swiatowiec noted that the “Connecticut Supreme Court holds that no fiduciary duty exists between an insurer and a third-party claimant ․ The court inferred that ‘if an insurer owes no fiduciary duty to its insured, whose interest it is safeguarding in settling a claim, a fortiori, it owes no such duty to a third party claimant.   Even if we were to assume, however, that the insurer does act in a fiduciary capacity with respect to its insured, that fact precludes an inference of a fiduciary duty existing between the insurer and a third party claimant because, such a duty would interfere with the insurer's ability to act primarily for the benefit of its insured.’  “ (Citation omitted;  internal quotation marks omitted.)   Superior Court, judicial district of Hartford, Docket No. CV 06 5003605 (July 20, 2009, Aurigemma, J.) (48 Conn. L. Rptr. 273, 276).

Additionally, “[a]n insurance company does not have a duty to settle fairly with third party claimants ․ nor does a claimant have a direct cause of action against an insurance company of the tortfeasor.”  (Internal quotation marks omitted.)   Farrah v. Allstate Ins. Co., Superior Court, Judicial District of Danbury, No. CV01 0342834 (Sep. 16, 2003, White, J.).   See also Chieffo v. Yannielli, Superior Court, judicial district of Waterbury, Docket No. 00 0159940 (July 10, 2001, Doherty, J.);   Patel v. Allstate Ins. Co., Superior Court, judicial district of Stamford–Norwalk, Docket No. 170676 (May 25, 2000, Karazin, J.);   Martin v. Marino, Superior Court, judicial district of Hartford, Docket No. 566135 (April 9, 1997, Aurigemma, J.).

Looking at the duty of insurance agents and companies in these contexts, Connecticut courts are willing to place affirmative duties on them only when they are in privity to the party seeking compensation prior to the event triggering coverage and only as it relates to their specialized knowledge, namely insurance terms and coverage.   Connecticut has yet to recognize a duty to those who may have a claim to the proceeds of an insurance policy and limits the duty to its actual insured.

In the present case, the intervening plaintiff seeks to hold the defendant liable for negligence by alleging that the defendant knew or should have known he was a mortgagee and that it failed to name him on the policy or treat him as a mortgagee after the intervening plaintiff demanded such action.   That the defendant knew or should have known that the intervening plaintiff is a mortgagee is not sufficient to create a duty to inquire as to whether the intervening plaintiff should be named on the policy.   If there was any duty, it was owed to the plaintiffs, as the insured, not the intervening plaintiff, and that duty would not extend so far as to require the defendant to affirmatively ask whether a mortgagee should be named on the policy.   Therefore, the defendant's motion to strike count two of the intervening complaint is granted.

C

Prayer for Relief

The defendant seeks to have paragraph (b) of the intervening plaintiff's prayer for relief, seeking reformation, stricken as legally insufficient because “the intervening complaint does not include any allegations of a mutual mistake, fraud or any inequitable conduct.”

“Practice Book ․ § 10–39, allows for a claim for relief to be stricken only if the relief sought could not be legally awarded.”  Pamela B. v. Ment, 244 Conn. 296, 325, 709 A.2d 1089 (1998).  “If the relief requested in a prayer for relief does not correspond to the allegations contained in the complaint, a motion to strike a prayer for relief should be granted.”   Dean v. Nowacki, Superior Court, judicial district of Litchfield, Docket No. CV 99 0091044 (January 2, 2001, Cremins, J.).

“A cause of action for reformation of a contract rests on the equitable theory that the instrument sought to be reformed does not conform to the real contract agreed upon and does not express the intention of the parties and that it was executed as the result of mutual mistake, or mistake of one party coupled with actual or constructive fraud, or inequitable conduct on the part of the other.”  (Internal quotation marks omitted.)  Traggis v. Shawmut Bank of Connecticut, N.A., 72 Conn.App. 251, 258, 805 A.2d 105, cert. denied, 262 Conn. 903, 810 A.2d 270 (2002).  “Reformation is legally impossible unless there is mutual mistake or unilateral mistake coupled with fraud or inequitable conduct ․ The allegations must make out a case for the equitable remedy asked, and if mistake is relied on, it must be precisely and distinctly charged.”  City Iron Works, Inc. v. Frank Badstuebner Post No. 2090, 22 Conn.Sup. 230, 231, 167 A.2d 462 (1960).   See also Harlach v. Metropolitan Property & Liability Ins. Co., 221 Conn. 185, 191, 602 A.2d 1007 (1992).

In the present case, the intervening plaintiff alleges that Reyes was required to name him as a mortgagee in the insurance policy taken out with the defendant, but that the defendant did not include the intervening plaintiff as a mortgagee on the policy.   The intervening plaintiff further alleges that the defendant knew or should have known that the intervening plaintiff was a mortgagee and that the defendant would be unjustly enriched by its refusal to pay the proceeds of the policy to the intervening plaintiff.

The intervening plaintiff's allegations do not assert a claim for mutual mistake.   Neither, based on the allegations in the intervening complaint, can the court determine if the intervening plaintiff is alleging unilateral mistake on the part of the plaintiffs or the defendant.   The court can only speculate as to whether Reyes failed to tell the defendant of a mortgagee or whether the defendant knew about the intervening plaintiff and simply failed to name him on the policy.   In addition, the allegations do not illuminate whether there was fraud or inequitable conduct and by whom any fraud or inequitable conduct was perpetrated.   Given the lack of specificity of the allegations, the intervening plaintiff has failed to allege facts sufficient to sustain a prayer for relief of reformation.   Therefore, the defendant's motion to strike the prayer for relief is granted.

CONCLUSION

For the foregoing reasons, the defendant's motion to dismiss is granted and the motion to strike count two and the prayer for relief is also granted.

Wilson, J.

FOOTNOTES

FN1. It should be noted, however, that even if the intervening plaintiff did have standing to bring a breach of contract claim as an intended third-party beneficiary, the count would be stricken.   The intervening plaintiff has neither alleged a contract between himself and the defendant, nor, as explained above, alleged sufficient facts to infer that the plaintiffs and defendant intended that the defendant would have a direct obligation to him..  FN1. It should be noted, however, that even if the intervening plaintiff did have standing to bring a breach of contract claim as an intended third-party beneficiary, the count would be stricken.   The intervening plaintiff has neither alleged a contract between himself and the defendant, nor, as explained above, alleged sufficient facts to infer that the plaintiffs and defendant intended that the defendant would have a direct obligation to him.

FN2. The defendant briefly remarks in its moving papers that as an excess and surplus lines insurer, it is not considered an insurance agent for the purposes of professional negligence.   It provides no authority to support that position, however, and the court could find none.   Moreover, such information is a fact outside of the allegations of the complaint and cannot be considered on a motion to strike.  “[The court is] limited ․ to a consideration of the facts alleged in the complaint.   A ‘speaking’ motion to strike (one imparting facts outside the pleadings) will not be granted.”  Doe v. Marselle, 38 Conn.App. 360, 364, 660 A.2d 871, rev'd on other grounds, 236 Conn. 845, 675 A.2d 835 (1995).   Thus, the court will consider the professional negligence arguments on the merits..  FN2. The defendant briefly remarks in its moving papers that as an excess and surplus lines insurer, it is not considered an insurance agent for the purposes of professional negligence.   It provides no authority to support that position, however, and the court could find none.   Moreover, such information is a fact outside of the allegations of the complaint and cannot be considered on a motion to strike.  “[The court is] limited ․ to a consideration of the facts alleged in the complaint.   A ‘speaking’ motion to strike (one imparting facts outside the pleadings) will not be granted.”  Doe v. Marselle, 38 Conn.App. 360, 364, 660 A.2d 871, rev'd on other grounds, 236 Conn. 845, 675 A.2d 835 (1995).   Thus, the court will consider the professional negligence arguments on the merits.

Wilson, Robin L., J.