Northeast Management Group, Inc. v. Underwriters at Lloyd's London (2014)

MEMORANDUM OF DECISION RE MOTION TO STRIKE (# 116)

FACTS

The plaintiff, Northeast Management Group, Inc., filed a ten-count revised complaint on August 12, 2013, against the defendants, Underwriters at Lloyd's London a/k/a Certain Underwriters at Lloyd's, London, Certain Underwriters at Lloyd's, London, East Coast Claims Service, Inc., Jeffrey Harnish, Biller Associates, and David Biller.¹  In the revised complaint, the plaintiff alleges the following facts.   On August 19, 2010, Underwriters at Lloyd's London a/k/a Certain Underwriters at Lloyd's, London and Certain Underwriters at Lloyd's, London (hereinafter collectively referred to as Lloyd's) issued an insurance policy to the plaintiff for certain real property located at 196 Terminal Lane, New Haven, Connecticut (the premises) with a stated coverage period of August 4, 2010, to August 4, 2011.   On December 25, 2010, while said policy was in full force and effect, the premises suffered damage as a result of a weather event.   At the time the damage was sustained, the plaintiff had paid all premiums due under the policy and performed all obligations required under the policy.   The plaintiff submitted a claim for damages to the premises, the roof on the premises, the premises' components, personal property, and loss of use and/or rental income.   Despite due demand, Lloyd's failed and refused to compensate the plaintiff for its loss.

On January 31, 2011, the plaintiff entered into a written agreement to retain Biller Associates and Biller to act as the plaintiff's public adjuster to assist in the adjustment and settlement of the loss occurring at the premises.   Despite the written agreement, no such assistance was continuously made available to the plaintiff.   Rather, Biller Associates and Biller have been largely unavailable, nonresponsive, noncommunicative, and sporadically involved in the adjustment process.

In counts seven and eight of the revised complaint, the plaintiff alleges a breach of contract against Biller Associates and Biller, respectively.   In counts nine and ten of the revised complaint, the plaintiff incorporates the allegations in count seven and further alleges that Biller Associates and Biller, respectively, violated the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42–110a et seq., in that despite numerous demands, they have failed to adhere to their obligations under the written agreement, continually failed to provide an explanation for their nonresponsiveness and unavailability, and attempted to take advantage of their prior dealings with the plaintiff by misleading and deceiving the plaintiff into believing that they would adhere to the terms of the agreement.   As a result of their unfair and deceptive trade practices, the plaintiff has suffered an ascertainable loss of money or property.

On September 27, 2013, the defendants filed a motion to strike, accompanied by a memorandum of law, counts nine and ten of the revised complaint.   The plaintiff did not file an objection to the defendants' motion to strike.   The matter was heard at short calendar on October 21, 2013.   The plaintiff did not make an appearance at short calendar.

DISCUSSION

“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).  “A motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court.”  (Internal quotation marks omitted.)   Simms v. Seaman, 308 Conn. 523, 529, 69 A.3d 880 (2013).  “In ruling on a motion to strike, the court is limited to the facts alleged in the complaint.”  (Internal quotation marks omitted.)  Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997).

“[I]t is fundamental that in determining the sufficiency of a complaint challenged by a defendant's motion to strike, all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted ․ The role of the trial court in ruling on a motion to strike is to examine the [complaint], construed in favor of the [plaintiff], to determine whether the [pleading party has] stated a legally sufficient cause of action.”  (Citation omitted;  internal quotation marks omitted.)  Coe v. Board of Education, 301 Conn. 112, 116–17, 19 A.3d 640 (2011).  “[P]leadings are to be construed broadly and realistically, rather than narrowly and technically ․” (Internal quotation marks omitted.)  Downs v. Trias, 306 Conn. 81, 92, 49 A.3d 180 (2012).   Nevertheless, a motion to strike “does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings.”  (Emphasis omitted;  internal quotation marks omitted.)  Faulkner v. United Technologies Corp., supra, 240 Conn. 588.

The defendants, in their motion to strike, argue that counts nine and ten are legally insufficient in that the plaintiff has failed to properly allege a claim for unfair trade practices under CUTPA.   Alternatively, the defendants argue that counts nine and ten are legally insufficient in that the plaintiff has failed to allege more than one instance of misconduct as required by CUIPA.   The plaintiff did not file a reply.   The threshold question is whether counts nine and ten of the plaintiff's revised complaint are standalone claims under CUTPA,² or if the counts fall within the purview of the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a–815 et seq.³  Counts nine and ten of the plaintiff's revised complaint allege that the defendants violated CUTPA and does not explicitly allege CUIPA.

“At the outset, we set forth the legal standard that governs CUTPA claims.   [General Statutes § ]42–110b(a) provides that [n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.   It is well settled that in determining whether a practice violates CUTPA we have adopted the criteria set out in the cigarette rule by the [F]ederal [T]rade [C]ommission for determining when a practice is unfair:  (1)[W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise—in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness;  (2) whether it is immoral, unethical, oppressive, or unscrupulous;  (3) whether it causes substantial injury to consumers, [competitors or other businesspersons] ․ All three criteria do not need to be satisfied to support a finding of unfairness.   A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three ․ Thus a violation of CUTPA may be established by showing either an actual deceptive practice ․ or a practice amounting to a violation of public policy ․ In order to enforce this prohibition, CUTPA provides a private cause of action to [a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a [prohibited] method, act or practice ․” (Footnote omitted;  internal quotation marks omitted.)  Ulbrich v. Groth, 310 Conn. 375, 409–10, 78 A.3d 76 (2013).

“[I]t is possible to state a cause of action under CUTPA for a violation of CUIPA.”  State v. Acordia, Inc., 310 Conn. 1, 28, 73 A.3d 711 (2013).  “In [Mead v. Burns, 199 Conn. 651, 665–66, 509 A.2d 11 (1986), the Supreme Court] stated that, [a]lthough [Conaway v. Prestia, 191 Conn. 484, 464 A.2d 847 (1983) ] holds that CUTPA may authorize a cause of action that builds upon the public policy embodied in specific statutory provisions, such a CUTPA claim must be consistent with the regulatory principles established by the underlying statutes.   In [Griswold v. Union Labor Life Ins. Co., 186 Conn. 507, 442 A.2d 920 (1982), the Supreme Court] held that a litigant complaining of unfair insurance practices was entitled to maintain a private right of action under CUTPA for alleged unfair trade practices, as defined by [CUIPA].”  (Internal quotation marks omitted.)  Id., 30–31.

In determining whether CUIPA applies, “[w]e begin with the language of CUIPA.  Section 38a–815 provides in relevant part:  ‘No person shall engage in this state in any trade practice which is defined in section 38a–816 as, or determined pursuant to sections 38a–817 and 38a–818 to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance ․’ “ State v. Acordia, Inc., supra, 310 Conn. 19.   In turn, General Statutes § 38a–816(6) considers the following to be unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:  “failing to acknowledge and act with reasonable promptness upon communications with respect to claims arising under insurance policies;  failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;  refusing to pay claims without conducting a reasonable investigation based upon all available information;  ․ not attempting in good faith to effectuate prompt, fair and equitable settlement of claims in which liability has become reasonably clear ․” Additionally, “[section] 38a–816 ․ requires that a plaintiff allege and prove that the relevant conduct was a part of a general business practice.”  Capstone Building Corp. v. American Motorists Ins. Co., 308 Conn. 760, 802 n.41, 67 A.3d 961 (2013).

“The term ‘general business practice’ is not defined in the statute, so we may look to the common understanding of the words as expressed in a dictionary ․ ‘General’ is defined as ‘prevalent, usual [or] widespread’ ․ and ‘practice’ means ‘[p]erformance or application habitually engaged in ․ [or] repeated or customary action.’  “ (Citations omitted.)  Lees v. Middlesex Ins. Co., 229 Conn. 842, 849 n.8, 643 A.2d 1282 (1994).   In using this term, the legislature has determined that “isolated instances of unfair insurance settlement practices are not so violative of the public policy of this state as to warrant statutory intervention.   Under CUTPA, as under CUIPA, a litigant is bound by this legislative determination.”  (Internal quotation marks omitted.)  State v. Acordia, Inc., supra, 310 Conn. 31.   Accordingly, the plaintiff “must allege that the insurer has treated other claimants unfairly in a manner that constitutes a general business practice.”  Urban Apparel Plus, LLC v. Sentinel Insurance Co., Superior Court, judicial district of New Haven, Docket No. CV–13–6035293–S (October 31, 2013, Fischer, J.) [57 Conn. L. Rptr. 124].

“There is no appellate authority ․ as to what is required for an allegation to sufficiently allege a general business practice, the number of instances of insurance misconduct which must be alleged and how specific those allegations must be.   A split of authority exists regarding the degree of specificity required when pleading a general business practice under CUIPA to survive a motion to strike.   One line of cases ․ requires that the plaintiff plead specific facts to demonstrate acts of insurer misconduct that go beyond the plaintiff's immediate claim ․ The other line of cases has held, essentially, that as long as the plaintiff alleges that the insurer misconduct involves other insureds, pleading specific instances of such misconduct is not required.”  (Internal quotation marks omitted.)  Urban Apparel Plus, LLC v. Sentinel Insurance Co., supra, Superior Court, Docket No. CV–13–6035293–S.   “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.”  Gesswein Realty, LLC v. Peerless Ins. Co., Superior Court, judicial district of Fairfield, Docket No. CV–13–6032847–S (September 13, 2013, Radcliffe, J.).

A plaintiff cannot circumvent the requirements of CUIPA by alleging a CUPTA claim where the claim is related to the insurance industry.  “[I]t would be ․ anomalous to permit a CUTPA claim to override a CUIPA regulatory pattern [rather] than to require a private litigant ․ to comply with the statutory requirements of [alleging more than one instance of misconduct under CUIPA].”   Mead v. Burns, supra, 199 Conn. 666.   In Pacheco v. Allstate Insurance Co., Superior Court, judicial district of New Haven, Docket No. CV–94–541707–S (March14, 1995, Hale, S.T.R.), the court stated that “the plaintiff [had] attempted to circumvent the requirements of CUIPA by masking a CUIPA claim and labelling it a CUTPA claim.”   In that case, “[w]hat the plaintiff [had] attempted to allege [was] primarily a CUIPA violation.   He [had] alleged that the defendant acted unfairly in the settling of the claim between himself and the defendant ․ The claim that the plaintiff [had] alleged ․ [was] essentially a CUIPA claim of ‘unfair settlement practice’ as defined in General Statutes § 38a–816(6).   A plaintiff may not bring a claim under CUTPA which does not violate CUIPA where the alleged misconduct is related to the insurance industry.”  Id.

In the present case, counts nine and ten fall within the purview of CUIPA as they are related to the insurance industry.   Specifically, the plaintiff alleges that the defendants have been “involved in the adjustment process ․ Despite repeated telephone calls, electronic messages, facsimiles, written correspondences [the defendants have] been absent thereby failing and refusing to assist the Plaintiff in the adjustment process as agreed in writing.”   Additionally, the plaintiff alleges that the defendants “committed unfair and deceptive trade practices in the course of their trade or commerce pursuant to [§ 42–110a et seq.] in that ․ despite numerous demands, they continually failed to adhere to its obligations under the written agreement ․ despite numerous demands, it has continually failed to adhere to provide an explanation for its nonresponsive and unavailability ․” These claims allege unfair settlement practices as defined by § 38a–816 because the defendants were nonresponsive during communications arising out of the plaintiff's insurance claim.   Specifically, the plaintiff retained the defendants to act as the plaintiff's public adjusters and to “advise and assist [the plaintiff] in the adjustment and settlement of the loss occurring at the [p]remises ․ Despite the public adjuster's written agreement to advise and assist, no such advice or assistance has been continuously made available to the [p]laintiff ․ Rather, [the defendants have] been largely unavailable, nonresponsive, noncommunicative, and at best, sporadically involved in the adjustment process.”  (Internal quotation marks omitted.)

As this claim is related to the insurance industry and falls under CUIPA, the court adopts the majority approach which requires the plaintiff to allege specific acts establishing more than one instance of specific misconduct to demonstrate that the defendants' conduct constituted a general business practice.   The plaintiff has failed to allege more than one instance of misconduct in that the defendants' alleged misconduct arises from the plaintiff's single insurance claim.   See Gesswein Realty, LLC v. Peerless Ins. Co., supra, Superior Court, Docket No. CV–13–6032847–S.   Accordingly, the defendants' motion to strike counts nine and ten is granted because the plaintiff has failed to allege that the defendants' conduct constituted a general business practice.

CONCLUSION

For the foregoing reasons, the defendants' motion to strike is granted.

Wilson, J.

FOOTNOTES

FN1. Biller Associates and Biller filed this motion to strike and will, hereafter, be referred to as the defendants.   This memorandum will only address counts seven through ten, which are the counts against the defendants..  FN1. Biller Associates and Biller filed this motion to strike and will, hereafter, be referred to as the defendants.   This memorandum will only address counts seven through ten, which are the counts against the defendants.

FN2. General Statutes § 42–110b provides in relevant part that “[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”.  FN2. General Statutes § 42–110b provides in relevant part that “[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”

FN3. General Statutes § 38a–815 provides in relevant part that “[n]o person shall engage in this state in any trade practice which is defined in section 38a–816 as, or determined pursuant to sections 38a–817 and 38a–818 to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance ․ When used in said sections, ‘person’ means any individual, corporation, limited liability company, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, fraternal benefit society and any other legal entity engaged in the business of insurance, including producers and adjusters.”.  FN3. General Statutes § 38a–815 provides in relevant part that “[n]o person shall engage in this state in any trade practice which is defined in section 38a–816 as, or determined pursuant to sections 38a–817 and 38a–818 to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance ․ When used in said sections, ‘person’ means any individual, corporation, limited liability company, association, partnership, reciprocal exchange, interinsurer, Lloyd's insurer, fraternal benefit society and any other legal entity engaged in the business of insurance, including producers and adjusters.”

Wilson, Robin L., J.