Joseph D. Bepco et al. v. Ben Johnson et al. (2013)

MEMORANDUM OF DECISION

This insurance coverage matter is before the court concerning defendant Peerless Insurance Company's (Peerless) motion for summary judgment (# 139).   The court heard oral argument concerning the motion on October 15, 2013.

As to Count Two of the complaint, Peerless argues that the insurance policy issued to the plaintiffs (Peerless' Exhibit A) does not cover their claimed damages.   In response, the plaintiffs, Joseph D. Bepco and Kimberly Bepco, contend that there are disputed issues of fact which preclude summary judgment.

As to Count Three, Peerless argues that there is no evidence that it violated the implied covenant of good faith and fair dealing.   Concerning the plaintiffs' claims that Peerless violated the Connecticut Unfair Trade Practices Act, General Statutes § 42–110a et seq.  (CUTPA) (Count Four), and the Connecticut Unfair Insurance Practices Act, General Statutes § 38a–815 et seq.  (CUIPA) (Count Five), Peerless contends that the allegations in the complaint are legally insufficient.   It also asserts that the alleged improper handling and denial of a claim that is not covered under the policy cannot be the basis for a claim of violation of CUTPA/CUIPA.   The plaintiffs presented no arguments concerning good faith and fair dealing, CUTPA, or CUIPA.

After consideration and for the reasons stated below, the motion for summary judgment is denied as to Count Two and granted as to Counts Three, Four, and Five.

I

Background

The court summarizes the allegations set forth in the plaintiffs' affidavits.   They allege that, in October 2010, they leased a basement apartment from defendants Ben and Jaclyn Johnson, located at 154 Lighthouse Road, Woodbury, Connecticut.   On March 6, 2011, they noticed leaking in the apartment.   According to defendant Ben Johnson, the septic pump had “tripped,” causing the septic tank to overflow and water to back up into the home.   On the morning of March 7, 2011, there was water throughout the apartment.   The plaintiffs reported a claim to Peerless by telephone.

The plaintiffs assert that an insurance adjuster for Peerless erroneously concluded that the source of the flood was groundwater.   They allege that an electrical wiring issue concerning the septic tank caused the flood.   Peerless disclaimed liability.

In their complaint, the plaintiffs seek to recover for losses incurred as a result of the flood, including damage to and contamination of their personal property.

In support of its motion, Peerless presented memoranda of law, and exhibits, including the report of an engineer.   In response, the plaintiffs submitted their affidavits and a memorandum in opposition.   Additional references to the factual background are set forth below.

II

Standard of Review

“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 ․ The party moving for summary judgment has the burden of showing the absence of any genuine issue of material fact and that the party is, therefore, entitled to judgment as a matter of law.”  (Internal quotation marks omitted.)  Rodriguez v. Testa, 296 Conn. 1, 6–7, 993 A.2d 955 (2010).

“When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue ․ Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue ․ It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue.   Mere assertions of fact ․ are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17–45].”  (Internal quotation marks omitted.)  Bonington v. Westport, 297 Conn. 297, 305, 999 A.2d 700 (2010).

“The courts hold the movant to a strict standard.   To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact.”  (Internal quotation marks omitted.)  Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 11, 938 A.2d 576 (2008).

III

DiscussionACount Two—Breach of Contract

“[C]onstruction of a contract of insurance presents a question of law for the court ․ An insurance policy is to be interpreted by the same general rules that govern the construction of any written contract ․ In accordance with those principles, [t]he determinative question is the intent of the parties, that is, what coverage the ․ [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy ․ If the terms of the policy are clear and unambiguous, then the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning ․ Under those circumstances, the policy is to be given effect according to its terms ․ When interpreting [an insurance policy], we must look at the contract as a whole, consider all relevant portions together and, if possible, give operative effect to every provision in order to reach a reasonable overall result ․

“In determining whether the terms of an insurance policy are clear and unambiguous, [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 ․ As with contracts generally, a provision in an insurance policy is ambiguous when it is reasonably susceptible to more than one reading ․ Under those circumstances, any ambiguity in the terms of an insurance policy must be construed in favor of the insured because the insurance company drafted the policy.”  (Internal quotation marks omitted.)  Lexington Ins. Co. v. Lexington Healthcare Group, Inc., 309 Conn. 1, 9–10, 68 A.3d 1121 (2013).

As the movant, Peerless has not met its burden to show clearly that the coverage provided by the policy does not apply.   Section I of the policy (page A- 12) provides that “we insure for direct physical loss to the property ․ caused by a peril listed below unless the loss is excluded in Section I EXCLUSIONS.”   The list of covered perils includes paragraph 12 (page A–13), which provides, in relevant part, “Accidental discharge or overflow of water or steam from within a plumbing ․ system ․ This peril does not include loss:  ․ c. On the ‘residence premises' caused by accidental discharge or overflow which occurs away from the building where the ‘residence premises' is located.”

As to exclusions, Section I EXCLUSIONS (pages A–13–A–14) provides, in relevant part, “We do not insure for loss caused directly or indirectly by any of the following.   Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss ․ 3. Water Damage, meaning a. Flood, surface water, ․;  b. Water which backs up through sewers or drains or which overflows from a sump;  or c. Water below the surface of the ground, including water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure.”

Thus, the policy covers discharge or overflow of water from within a plumbing system, but not loss on the “residence premises” caused by accidental discharge or overflow which occurs away from the building where the “residence premises” is located.   It also excludes what is defined as “Water Damage.”

The defendant argues that the claimed loss is from overflow of the septic tank, rather from the plumbing system.   The complaint is phrased more broadly.   See Count Two. In paragraph 15, the complaint refers generally to water appearing to emanate from around the bathroom area and along the interior walls of a hallway and one of the bedrooms.   It also alleges water on the carpeting around the exterior walls of the basement, which spread towards the center of all rooms.   Paragraph 16 refers to “water throughout the apartment.”   Paragraph 38 generally alleges that the dwelling “was severely damaged by water.”

In addition, the complaint also refers to septic system back up as a potential source of the water.   See second count, ¶ 19.   In paragraph 30, the plaintiffs allege that an engineer for Peerless indicated that the problem was not caused by ground water and stated that, “the cause was most likely plumbing back-up due to the failure of the septic pump.”

Clearly, the policy provides some coverage for loss due to water coming from a plumbing system.   The policy does not define either a “plumbing” or a “septic” system.   See policy, pages A–8 to A–9 (definitions).   Where an insurance policy does not define a term, the Supreme Court has ascertained the natural and ordinary meaning from dictionary definitions.   See Connecticut Ins. Guaranty Assn. v. Fontaine, 278 Conn. 779, 784–85, 787, 900 A.2d 18 (2006).  “To ascertain the commonly approved usage of a word, it is appropriate to look to the dictionary definition of the term.”  (Internal quotation marks omitted.)   Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 539, 791 A.2d 489 (2002).

“Here, the language of the [policy] is clear and unambiguous.   It refers to plumbing systems generally and is not confined to any particular components thereof ․ Plumbing refers to the pipes, fixtures and other apparatus concerned in the introduction, distribution and disposal of water in a building.   Webster, Third New International Dictionary [Webster's].”  (Citation omitted.)  Pollack v. Gampel, 163 Conn. 462, 472, 313 A.2d 73 (1972).   Similarly, a “plumber” is “one who installs, repairs, and maintains piping, fittings, and fixtures (as toilets, sinks, baths) that are involved in the distribution and use of water in a building (as for sanitary, industrial, or domestic purposes).”   Webster's (2002 Ed.), p. 1743.

Webster's (2002 Ed.), page 2071, defines a “septic tank” as “a tank in which the organic solid matter of continuously flowing sewage is deposited and retained until it has been disintegrated by anaerobic bacteria.”  “In order to fulfill its purpose, a septic system must be ‘attached’ to the building it serves.”  Silitschanu v. Groesbeck, 208 Conn. 312, 315, 543 A.2d 737 (1988).   A plumbing system may include pipe running from the outside of a building to a toilet inside.   See Mazzotta v. Bornstein, 104 Conn. 430, 435–36, 133 A. 677 (1926).

Peerless contends that the plaintiffs' claim that the water infiltration was caused by an electrical failure of the septic system pump, which Peerless denies, is not covered because failures of septic systems are not a named peril.   Peerless argues that there is no coverage for loss from overflow of the septic tank, rather than from a plumbing, heating, air conditioning or automatic fire protection sprinkler system.

The policy language does not differentiate the septic system from the plumbing.   Rather, as discussed above, it excludes loss on the “residence premises” caused by accidental discharge or overflow which occurs away from the building where the “residence premises” is located, and provides an exclusion for defined “Water Damage.”

Also as discussed above, the movant must meet the burden of showing the absence of any genuine issue of material fact and that it is entitled to judgment as a matter of law.   No affidavit from Peerless' engineer was provided and his report (Exhibit B) is unauthenticated.  “Only evidence that would be admissible at trial may be used to support or oppose a motion for summary judgment.”  Home Ins. Co. v. Aetna Life & Casualty Co., 235 Conn. 185, 202–03, 663 A.2d 1001 (1995).   The court may not consider the engineer's report.

The movant has not shown what caused the influx of water which led to the claimed loss.   In the absence of evidence, the court may not make a finding that there is no coverage.   The documents submitted in support of the motion for summary judgment do not establish that there is no genuine issue of material fact.   The movant has not shown that it is entitled to judgment as a matter of law as to the claims in the second count.   The plaintiffs had no obligation to submit documents establishing the existence of such an issue.

B

Count Three—Good Faith and Fair Dealing

In Count Three, the plaintiffs allege that Peerless engaged in conduct which injured their right to receive some or all of the benefits under the policy, “by failing to make payment of claims made under the Policy by the Plaintiffs.”   See Count Three, ¶ 43.   They claim that by so doing, Peerless was acting in bad faith.   See Count Three, ¶ 44.   They also allege that the failure to make payment of claims was a violation of the implied covenants of good faith and fair dealing.   See Count Three, ¶ 45.

“[E]very contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement ․ The covenant of good faith and fair dealing presupposes that the terms and purpose of the contract are agreed upon by the parties and that what is in dispute is a party's discretionary application or interpretation of a contract term ․ To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith.”  (Internal quotation marks omitted.)  Ramirez v. Health Net of the Northeast, Inc., supra, 285 Conn. 16–17, n.18.

“To recover for breach of the duty of good faith and fair dealing, the plaintiffs had to allege and prove that the defendant[s] engaged in conduct design[ed] to mislead or to deceive ․ or a neglect or refusal to fulfill some duty or some contractual obligation not prompted by an honest mistake as to one's rights or duties ․” (Emphasis in original;  internal quotation marks omitted.)  Miller v. Guimares, 78 Conn.App. 760, 773, 829 A.2d 422 (2003).   “[A]n action for breach of the covenant of good faith and fair dealing requires proof of three essential elements, which the plaintiff must duly plead:  first, that the plaintiff and the defendant were parties to a contract under which the plaintiff reasonably expected to receive certain benefits;  second, that the defendant engaged in conduct that injured the plaintiffs right to receive some or all of those benefits;  and third, that when committing the acts by which it injured the plaintiff's right to receive benefits it reasonably expected to receive under the contract, the defendant was acting in bad faith.”  (Internal quotation marks omitted.)   Austrian v. United Health Group, Inc., Superior Court, judicial district of Waterbury, Complex Litigation Docket at Waterbury, Docket No. X06 CV 05 4010357 (July 17, 2007, Stevens, J.) (43 Conn. L. Rptr. 852).

“[B]ad faith is not simply bad judgment or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity ․ it contemplates a state of mind affirmatively operating with furtive design or ill will.”  (Internal quotation marks omitted.)  PSE Consulting, Inc. v. Frank Mercede and Sons, Inc., 267 Conn. 279, 305, 838 A.2d 135 (2004).  “Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive.”   (Internal quotation marks omitted.)  Habetz v. Condon, 224 Conn. 231, 237, 618 A.2d 501 (1992).

In the third count, the plaintiffs allege that Peerless violated its obligations under the policy by failing to make payment for claims made under the policy by the plaintiffs, which amounted to acting in bad faith.   See Count Three, ¶¶ 43–44.

In support of its motion as to the third count, Peerless notes that disagreement between an insurer and an insured as to coverage is not equivalent to bad faith.  “Habetz v. Condon, supra, made it clear ․ that mere disagreement about contract performance does not suffice to establish bad faith.”  Walpole Woodworkers, Inc. v. Manning, 126 Conn.App. 94, 100–01, 11 A.3d 165 (2011), affirmed, 307 Conn. 582, 57 A.3d 730 (2012).

In response, the plaintiffs presented no evidence of bad faith and no argument concerning good faith and fair dealing.   Claims not briefed are deemed to be abandoned.   See Abington Limited Partnership v. Heublein, 257 Conn. 570, 587 n.29, 778 A.2d 885 (2001).

“[E]ven with respect to questions of motive, intent and good faith, the party opposing summary judgment must present a factual predicate for his argument in order to raise a genuine issue of fact.”  (Internal quotation marks omitted.)   Chadha v. Charlotte Hungerford Hospital, 97 Conn.App. 527, 539, 906 A.2d 14 (2006).   As stated above, a party may not rely solely on its allegations in opposition to a properly supported motion for summary judgment.   In the absence of evidence of bad faith, no genuine issue of material fact is at issue as to Count Three.  “[I]n light of the absence of any evidence of bad faith, the rendering of summary judgment in favor of the defendant [is] warranted.”   Jones v. H.N.S. Management Co., 92 Conn.App. 223, 229, 883 A.2d 831 (2005).

C

Counts Four and Five—CUTPA and CUIPA

Peerless argues that Counts Four and Five are legally insufficient.   See Peerless memorandum of law (# 140), p. 13.

A trial court may rule on a motion for summary judgment that is used to challenge the legal sufficiency of the complaint when it is clear that the motion is being used for that purpose and the nonmoving party does not object to the use of the motion for that purpose.   See Larobina v. McDonald, 274 Conn. 394, 402–03, 876 A.2d 522 (2005).   Here, Peerless' brief explicitly challenged the legal sufficiency of Counts Four and Five. The plaintiffs raised no objection to the use of the motion for that purpose, and, as stated above, presented no argument as to their legal sufficiency.   Also, the plaintiffs did not seek to replead.   See American Progressive Life & Health Ins. Co. of New York v. Better Benefits, LLC, 292 Conn. 111, 124–25, 971 A.2d 17 (2009) (trial court should have treated motion for summary judgment as motion to strike where nonmoving party had offered to amend pleadings to clarify factual basis for claim).

“CUTPA prohibits unfair or deceptive trade practices without requiring proof of intent to deceive, to defraud or to mislead.”  Associated Investment Co. Ltd Partnership v. Williams Associates IV, 230 Conn. 148, 158, 645 A.2d 505 (1994).

As to CUTPA, Peerless argues that the plaintiffs must plead and prove that it engaged in unfair claim settlement practices with such frequency as to constitute a general business practice, citing General Statutes § 38a–816(6).  Section 38a–816(6) defines unfair claim settlement practices to include practices which are committed or performed “with such frequency as to indicate a general business practice.”

“[U]nless an insurance related practice violates CUIPA or, arguably, some other statute regulating a specific type of insurance related conduct, it cannot be found to violate any public policy and, therefore, it cannot be found to violate CUTPA.”  State v. Acordia, Inc., 310 Conn. 1, 37, 73 A.3d 711 (2013).

As to CUTPA, in Count Four, the plaintiffs do not allege that Peerless violated CUIPA or any other statute regulating insurance related conduct.   Rather, they incorporate by reference the allegations made in Count Three and allege that Peerless' actions violated CUTPA.   See Count Four, ¶ 47.

Without more, the allegations are insufficient to support a claim under CUTPA.   In addition, as stated above, the plaintiffs presented no argument as to CUTPA, thereby abandoning Count Four.

Peerless also argues that there is no private right of action under CUIPA.   In Count Five, paragraph 49, the plaintiffs allege that Peerless' actions constituted unfair claim settlement practices in violation of CUIPA.   As stated above, in response, the plaintiffs presented no argument as to CUIPA.

A majority of Superior Court decisions have determined that no private right of action under CUIPA exists.   See Mendoza v. Allstate Insurance Co., Superior Court, judicial district of Stamford–Norwalk at Stamford, Docket No. FST CV 11 6011389 (March 15, 2012, Tobin, J.) (collecting cases).¹  “The consensus of these courts may be summarized as follows:  1) there is no express authority under CUIPA for private causes of action;  2) CUIPA is not ambiguous;  3) the regulatory scheme under CUIPA contemplates investigation and enforcement actions to be taken by the insurance commissioner;  and 4) consequently there is no private cause of action under CUIPA ․ A number of Superior Courts have taken particular note of the express private right of action provided under CUTPA and the absence of similar provisions under CUIPA.”  (Citations omitted.)  Id.

This court finds the reasoning of the majority of Superior Courts to be persuasive and, as in prior rulings on the issue, finds that no private cause of action exists under CUIPA.   In addition, by not briefing the issue, the plaintiffs abandoned their CUIPA allegations in Count Five.

CONCLUSION

For the reasons stated above, the motion for summary judgment is denied as to Count Two and granted as to Counts Three, Four, and Five. It is so ordered.

BY THE COURT

ROBERT B. SHAPIRO

JUDGE OF THE SUPERIOR COURT

FOOTNOTES

FN1. Also, this issue was not resolved in the Supreme Court's recent decision in State v. Acordia, Inc., supra, 310 Conn. 33..  FN1. Also, this issue was not resolved in the Supreme Court's recent decision in State v. Acordia, Inc., supra, 310 Conn. 33.

Shapiro, Robert B., J.