LLC v. Peerless Insurance Company et al. (2013)

MEMORANDUM OF DECISION

FACTS

On February 26, 2010, the Defendant, Peerless Insurance Company, issued a policy of insurance (Policy # CPB 8603799) to the Plaintiff, Gesswein Realty, LLC and Paul H. Gesswein & Co., Inc. The Plaintiffs were listed as named insureds on the policy.

The policy covered property located at 201 Hancock Avenue, in the City of Bridgeport.   The policy insured the property for a face amount of $10,595,000.   Additional coverage was provided for loss of business income and extra expense in the amount of $4,050,000, with an additional coverage extension of $550,000.

Total monies which might be payable under the policy were $15,195,000.

On July 6, 2010, a fire occurred at 201 Hancock Avenue.   The conflagration began in a portion of the property leased to MJ Metal, Inc., and was caused by the misuse of a torch, by one of the tenant's employees.   The portion of the property leased to MJ Metals, Inc. consisted of 20,000 square feet, and was used as an office, and a warehouse for scrap metal.

The loss was immediately reported to the Defendant, and it was promptly determined that the fire was a covered event, pursuant to the terms and conditions of the policy issued by Peerless.   Approximately $3,000,000 has been paid pursuant to the insurance policy, under the building, personal property, extra expense, and business income coverages.

The Plaintiffs contend that the Defendant has failed to pay some of the claims which have been submitted, and that other payments were, or have been, delayed.

It is claimed that certain expenses, including an upgrading of the sprinkler system at an estimated cost of $80,000, repairs to the roof estimated at $60,000, and a new floor for the warehouse costing $65,000, are among the items which the Defendant, Peerless Insurance Company, has not paid.

The Plaintiffs maintain that these and other miscellaneous costs are required to be paid, pursuant to the provisions of the applicable policy of insurance.

This action was instituted, returnable February 19, 2013, in three (3) counts.

Count One claims a breach of contract, while Count Two alleges that the Defendants have breached the implied covenant of good faith and fair dealing which is implied in the contract.

Count Three alleges a violation of the Connecticut Unfair Trade Practices Act (CUTPA) § 42–110a et seq. of the Connecticut General Statutes.

In addition to Peerless Insurance Co., also named as Defendants in this action are Excelsior Insurance Co., Liberty Mutual Agency Corporation, and Liberty Mutual Group, Inc.

The Defendants have moved to strike Count Three, the CUTPA count.   They maintain that the claim, as pled, fails to state a cause of action.

MOTION TO STRIKE—STANDARD OF REVIEW

The purpose of a motion to strike is to test the legal sufficiency of the allegations described in a complaint.  Faulkner v. United Technologies, 240 Conn. 576, 580 (1997);  Ferryman v. Groton, 212 Conn. 138, 142 (1989);  Practice Book S. 39.   The motion assumes all well pleaded facts, and if facts, as deemed provable in a complaint, would support a cause of action, the motion to strike must be denied.  Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498 (2003);  Waters v. Autuori, 36 Conn. 820, 825–26 (1996).

All facts alleged in the complaint, must be construed in the manner most favorable to the non-moving party, in this case, the Plaintiffs Gesswein Realty, LLC and Paul H. Gesswein & Co. Novametric Medical Systems Inc. v. BOP Group, Inc., 224 Conn. 210, 215 (1992);  Rowe v. Gordon, 209 Conn. 273, 278 (1998).   The court's inquiry is limited by the facts alleged in the complaint.  Cavallo v. Derby Savings Bank, 188 Conn. 281, 285–86 (1982).   However, although all facts contained in the complaint are deemed proven, conclusions of law are not.  Maloney v. Conroy, 208 Conn. 392, 394 (1988).

COUNT THREE FAILS TO STATE A CLAIMED VIOLATION OF THE CONNECTICUT UNFAIR TRADE PRACTICES ACT (CUTPA)

In this action, the Plaintiffs claim that the Defendants have wrongfully refused to pay certain costs and expenses incurred as a result of the July 6, 2010 fire.   They contend that certain payments were not made in a timely fashion, and that certain costs which have not been paid, are covered pursuant to the applicable insurance policy.

They also allege that inflexible deadlines were imposed by the Defendants, deadlines which could not be met due to extraordinary weather conditions.

Section 42a–110b(a) of the General Statutes provides:  “No person shall engage in any unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”

A party seeking to recover damages under CUTPA, must meet two requirements:  1) he must establish that the conduct at issue constitutes an unfair or deceptive trade practice, and 2) he must prove a reasonable estimate of the damage suffered—that is, he must show that he has suffered an ascertainable loss.  Beverly Hills Concepts, Inc. v. Schatz, Schatz, Ribicoff & Kotkin, 247 Conn. 48, 78–79 (1998);  Reader v. Cassarino, 54 Conn.App. 292, 298–99 (1998).

In determining whether a practice violates CUTPA, Connecticut has adopted the threefold test known as the “cigarette rule.”   The party seeking to prove a CUTPA violation must prove:  1) that the practice offends public policy within a common-law, statutory or other concept of fairness, 2) it is immoral, unethical, oppressive, or unscrupulous, and 3) it causes substantial injury to consumers.   Hartford Electric Supply Co. v. Allen–Bradley Co., 250 Coun. 334, 367–68 (1999).

In this case, the Plaintiffs contend that the alleged CUTPA violation arises out of violation of the Connecticut Unfair Insurance Practice Ace (CUIPA), § 38a–816 et seq. of the General Statutes.

They claim that the Defendants have failed to pay the legitimate claims and losses of the Plantiffs, and to fully and fairly adjust the claims and losses which were suffered in the July 2010 fire.

They maintain that the actions of the Defendants, acting through their authorized agents and employees, constitute unfair claims settlement practices, pursuant to S. 38a–816(6) of the General Statutes.   In order to qualify as an “unfair claim settlement practice,” the statute requires that the activity be performed “․ with such frequency as to indicate a general business practice ․”

Although CUIPA, standing alone, does not provide for an independent cause of action, a claimed violation or the Connecticut Unfair Trade Practice Act (CUTPA) may be premised upon violations of CUIPA.   However, a CUTPA claim, pursuant to § 38a–816(6) of the General Statutes, requires proof that the unfair settlement practices were committed or performed with such frequency as to indicate a general business practice.  Mead v. Burns, 199 Conn. 651, 665–66 (1986).   The allegedly improper conduct in the processing of handling of a single claim, without any evidence of misconduct in the processing or any other claim, does not rise to the level of a general business practice, as required by § 39a–861(6) of the General Statutes.  Lees v. Middlesex Ins. Co., 229 Conn. 842, 849 (1994).   The alleged failure to fairly settle or adjust a single claim, arising out of a single occurrence, is insufficient to establish a violation of CUTPA, arising out of an allegedly improper conduct under CUIPA.   Quimby v. Kimberly Clark Corporation, 28 Conn.App. 660, 672 (1992).

In Count Three, the plaintiffs do not allege any improper conduct, which is not related to the July 6, 2010 occurrence at 201 Hancock Avenue, Bridgeport.   The only reference to other occurrences is in paragraph 43 of the operative complaint, which claims “upon information and belief” that the acts of the Defendants represent a general business practice.

Although there is a split of authority among Superior Court judges who have considered the issue, the majority view holds that the failure to allege specific acts establishing more than one instance of specific misconduct is insufficient to set forth a valid claim under CUTPA arising out of a claimed violation of CUIPA.  (See Dadura v. NGM Insurance Co., Superior Court, judicial district of New Britain, Docket No. CV 10–6004690 (April 2011);  Carrol v. Allstate Ins. Co., Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. CV 98–0164867 (June 1999);  Alers v. Berkley Administrators of Connecticut, Inc., Superior Court, judicial district of Fairfield, Docket No. CV 04–4003705 (July 2005)).

Merely representing that the conduct of the Defendants represents a general business practice “on information and belief,” is insufficient to allege a claim pursuant to the Connecticut Unfair Trade Practices Act (CUTPA).

Such language is conclusory, and, while acceptable under some circumstances, is insufficient, to establish a cause of action, where no attempt has been made to plead facts establishing any other instance or instances, to demonstrate any violation of CUIPA, independent of the fire of July 6, 2010.   Curie v. Aetna Casualty & Surety Company, Superior Court, judicial district of New Britain, Docket No. CV–96–0558900 (August 1999).

The Defendants' motion to Strike is GRANTED.

RADCLIFFE, J.

Radcliffe, Dale W., J.