Opinion
AANCV156018611S
06-15-2017
55 Gilbert, LLC v. Paul Kurowski Insurance, LLC et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION ON THE DEFENDANTS' MOTIONS TO STRIKE
Barry K. Stevens, J.
STATEMENT OF THE CASE
The plaintiff in this action is 55 Gilbert, LLC. The defendants are Paul Kurowski Insurance, LLC, Nicole Mercuriano, Joseph Distel and Co., Inc., Scottsdale Insurance Company and the Lexington Insurance Company. In the second revised complaint, the plaintiff alleges the following. The plaintiff owned property located at 55 Gilbert Street, West Haven, Connecticut, and the plaintiff retained the defendants to procure insurance for the premises. The insurance coverage was obtained from Lexington, but was replaced by a policy from Scottsdale without the plaintiff's knowledge or consent. The Scottsdale policy did not provide the same coverage as the Lexington policy. After the property was damaged by a fire, the plaintiff submitted a claim to Scottsdale that was rejected because of an occupancy endorsement. This endorsement was not part of the Lexington policy, and according to the complaint, the fire loss would have been covered under the Lexington policy.
The defendants Paul Kurowski Insurance and Nicole Mercuriano have moved to strike count four of the revised complaint, and the defendant Joseph Distel has moved to strike count five of this complaint. These counts are based on the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110b, and allege violations of the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a-816(8). These counts allege, among other things, that the defendants knowingly made misrepresentations in the plaintiff's insurance application. For the following reasons, the defendants' motions to strike are denied.
General Statutes § 42-110b(a) provides: " No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.
Specifically, count four (paragraph thirty) against defendants Paul Kurowski Insurance and Nicole Mercuriano alleges the following: " The defendants made misrepresentations relating to plaintiff's application for insurance in violation of [General Statutes] § 38a-816(8) in that:
DISCUSSION
" A motion to strike attacks the legal sufficiency of the allegations in a pleading . . . In reviewing the sufficiency of the allegations in a complaint, courts are to assume the truth of the facts pleaded therein and to determine whether those facts establish a valid cause of action." (Internal quotation marks omitted.) Kortner v. Martise, 312 Conn. 1, 48-49, 91 A.3d 412 (2014). " 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 [plaintiff has] stated a legally sufficient cause of action." (Internal quotation marks omitted.) Coe v. Board of Education, 301 Conn. 112, 117, 19 A.3d 640 (2011). " [W]hether the plaintiff alleged the facts required . . . must be determined with due regard to the principle that the facts necessarily implied by the allegations in a complaint are sufficiently pleaded, and hence need not expressly be alleged." Bouchard v. People's Bank, 219 Conn. 465, 471, 594 A.2d 1 (1991). " 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). Similarly, " the trial court is limited to considering the grounds specified in the motion." Meredith v. Police Commission, 182 Conn. 138, 140, 438 A.2d 27 (1980).
II
CUTPA prohibits persons from engaging " in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." General Statutes § 42-110b(a). The defendants contend that the CUTPA counts of the revised complaint fail to allege legally sufficient CUTPA claims by relying primarily on the Supreme Court's decision in Haynes v. Yale-New Haven Hospital, 243 Conn. 17, 699 A.2d 964 (1997). In Haynes, the Supreme Court explained that although the provision of legal and medical services may fall within CUTPA's definition of trade or commerce as " the distribution of any services" under General Statutes § 42-110a(4), professional negligence or malpractice in these areas does not. Id., 34-35. " We thus conclude that the touchstone for a legally sufficient CUTPA claim against a health care provider is an allegation that an entrepreneurial or business aspect of the provision of services is implicated, aside from medical competence or aside from medical malpractice based on the adequacy of staffing, training, equipment or support personnel. Medical malpractice claims recast as CUTPA claims cannot form the basis for a CUTPA violation. To hold otherwise would transform every claim for medical malpractice into a CUTPA claim." Id., 38.
The definition section of CUTPA states the following: 'Trade' and 'commerce' means the advertising, the sale or rent or lease, the offering for sale or rent or lease, or the distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value in this state." General Statutes § 42-110a(4).
The defendants rely on the Haynes case to argue that the plaintiff's CUTPA claims must be stricken because the claims merely allege professional malpractice and fail to implicate the entrepreneurial or commercial aspects of the defendant's business activities. The court rejects the defendants' argument because, contrary to the defendants' emphasis, the controlling question is whether their conduct as alleged in the complaint violates CUIPA. The law is now well established that unfair insurance practices are defined by the legislature in CUIPA and the private remedy for such violations is available through CUTPA. Mead v. Burns, 199 Conn. 651, 663, 509 A.2d 11 (1986).
The holding of Haynes v. Yale-New Haven Hospital, supra, 243 Conn. 38, that CUTPA does not apply to the professional negligence or malpractice of health care providers has been extended by the trial courts to some other personal services, and the defendants maintain that it should be extended to insurance agents and brokers. See, e.g., N& L Trucking, LLC v. M.H. Chodos Ins. Agency, Superior Court, judicial district of New Haven, Docket No. CV-05-4011430-S (September 23, 2015, Thompson, J.) (40 Conn.L.Rptr. 33, ).
In considering a motion to strike, the court must assume the truth of the complaint's allegations, and the court cannot construe these allegations as narrowly as the defendants insist. In count four, the complaint alleges that Kurowski and Mercuriano prepared the insurance applications with representations that they knew were false relating to the occupancy and the value of the property, and made alterations to the application and substituted the insurer providing the coverage without the plaintiff's knowledge or consent. These defendants committed one or more of these acts " for the purpose of obtaining a fee or commission." Revised Complaint, Count Four ¶ 30.
In count five, the complaint alleges that Distel: processed the plaintiff's insurance application knowing that the application contained misrepresentations regarding the occupancy of the property; made misrepresentations to the plaintiff's agent regarding the change of coverage to Scottsdale, as well as regarding the nature and extent of the Scottsdale policy; and failed to obtain the plaintiff's consent to substitute the insurer providing the insurance coverage. Again, Distel committed one or more of these acts for the purpose of obtaining, retaining, or increasing the fee or commission paid to it from the plaintiff.
In summary, according to the complaint, the defendants' conduct involved misrepresentations in the plaintiff's insurance application, and substantive changes to the insurance policy without the plaintiff's consent, for the purpose of obtaining or increasing the amount of fee or commission received from the plaintiff. The court agrees with the plaintiff that these allegations against the defendants are sufficient to assert a violation of the provision of CUIPA, General Statutes § 38a-816(8), which prohibits the making of false representations relative to an application for an insurance policy for the purpose of obtaining a fee or commission. See generally Nazami v. Patrons Mutual Ins. Co., 280 Conn. 619, 910 A.2d 209 (2006).
The plaintiff also appears correct in characterizing the defendants' conduct as involving the " entrepreneurial" areas of the defendants' business activities, rather than merely involving the parties' " professional" relationships, but the court need not reach a definitive conclusion on this issue. This distinction, as argued by the defendants, based on their " entrepreneurial or commercial" business activities misses the point because it is legally irrelevant to an analysis regarding the applicability of CUIPA. The Supreme Court in Haynes explains that CUTPA only applies to the entrepreneurial or commercial aspects of certain professional services in order to construe the definition of " trade or commerce" as provided under CUTPA. An unfair or deceptive practice in the business of insurance, however, is not defined by the provisions of CUTPA. An unfair or deceptive practice in the business of insurance is defined by the provisions of CUIPA. General Statutes § 38a-815. As previously stated, the Supreme Court established in Mead v. Burns, supra, 199 Conn. 651, that unfair and deceptive insurance practices are defined by CUIPA and the private remedy for these violations is provided by CUTPA. Indeed, as further explained by the court in State v. Acordia, 310 Conn. 1, 73 A.3d 711 (2013), through CUIPA the legislature intended to occupy the field and to provide the exclusive source of public policy regarding unfair insurance practices: " [T]he legislature intended to set out specifically the types of actions that constitute unfair insurance practices in a highly detailed manner . . . [and] viewed accomplishing that task as essential to the underlying purpose of CUIPA: enabling the commissioner to better protect consumers. The many subsequent amendments incorporating additional practices as violative of CUIPA demonstrate an ongoing legislative effort to keep the list of prohibited practices as current as possible and provide further evidence of the legislature's intent to provide in CUIPA a comprehensive list of unfair insurance practices . . . The legislative history of CUIPA, therefore, demonstrates that the legislature intended to occupy the field of defining unfair insurance practices, thereby precluding courts from incorporating common-law principles as a basis for finding an unfair insurance practice." (Emphasis in original; internal quotation marks omitted.) State v. Acordia, Inc., supra, 310 Conn. 36.
Similarly, in other areas, the legislature itself has identified statutes whose violations may be redressed through CUTPA's private remedy provisions. " The Connecticut General Assembly has enacted 60 separate statutes which expressly provide that a violation of such legislation is a violation of CUTPA." R. Langer, J. Morgan, and D. Belt, 12 Connecticut Practice Series: Unfair Trade Practices, Business Torts and Antitrust, § 2.8, p. 48. Nothing requires the legislature to limit the scope of such statutes or condition the relief available under such statutes to " entrepreneurial or commercial" business activities.
Consequently, because the legislature has used CUIPA to identify exclusively and comprehensively unfair insurance practices, a CUIPA violation is neither defined, nor circumscribed by CUTPA. In CUIPA, the legislature is free to define an unfair insurance practice any way it sees fit within its rule making authority and within applicable constitutional strictures. More specifically, the legislature may define an unfair insurance practice as either including or excluding conduct in the " professional" or " non-entrepreneurial" relationship between the insurer and the insured. Therefore, in the present case, because the allegations of the revised complaint fairly state a cause of action under the provision of CUIPA prohibiting the making of false or fraudulent statements in an insurance application, the defendants' motions to strike must be denied.
The court notes that its analysis of the plaintiff's CUIPA claims contrasts with the holdings of other trial court decisions that have applied the distinction between personal services and entrepreneurial activities to CUTPA claims based on CUIPA violations. See, e.g., O& G Industries, Inc. v. Litchfield Ins. Group, Inc., Superior Court, judicial district of Litchfield, Docket No. CV-12-6006448-S (June 3, 2016, Pickard, J.) (62 Conn.L.Rptr. 471, 475-78, Id. ) (reviewing cases on this issue).
CONCLUSION
Therefore, for these reasons, the defendants' motions to strike are denied. Dated this 15th day of June 2017.
General Statutes § 38a-816(8) provides that an unfair or deceptive act or practice in the business of insurance includes: " Misrepresentations in insurance applications. Making false or fraudulent statements or representations on or relative to an application for an insurance policy for the purpose of obtaining a fee, commission, money or other benefit from any insurer, producer or individual."
a. they knowingly misrepresented to plaintiff the nature and extent of the coverage that would be afforded under the policy that was obtained, specifically that plaintiff was covered for a loss similar to that which was sustained on September 23, 2014 for the purpose of obtaining a fee or commission; b. they prepared applications on plaintiff's behalf with misrepresentations and false statements which they knew or should have known were false for the purpose of obtaining a commission, including statements relating to the occupancy and value of the property; c. they made alterations to plaintiff's application for insurance without plaintiff's knowledge or consent for the purpose of obtaining a fee or commission; and d. they advised the plaintiff that it had coverage in place with Lexington and then failed to communicate with plaintiff that substitute coverage with Scottsdale was in place which was not consistent with their previous representations about coverage in order to retain their fee or commission."Count five (paragraph twenty-nine) against defendant Distel alleges the following: " Distel, through its employee made misrepresentations relating to plaintiff's application for insurance in violation of [General Statutes] § 38a-816(8) in that:
a. It accepted and processed plaintiff's application for insurance thereby obtaining coverage for plaintiff, when it knew after discussing said application with plaintiff's agent, Nicole Mercuriano, that the application contained false information, inaccurate statements of the current condition of the subject property and/or misrepresentations with regard to the occupancy of the property for the purpose of obtaining a fee or commission from the plaintiff; b. It made misrepresentations to plaintiff's agent with regard to the reasons why coverage originally bound with Lexington had to be reissued with Scottsdale for the purpose of retaining a fee or commission from the plaintiff and/or increasing the amount of fee or commission it received from plaintiff; c. It made misrepresentations to plaintiff's agent about the nature and extent of the coverage that would be afforded to plaintiff under the Scottsdale policy for the purpose of retaining a fee or commission and/or increasing the amount of the fee or commission it received from plaintiff; d. It failed to obtain plaintiff's consent to substituting the Scottsdale policy for the Lexington policy in order to retain its fee or commission."