Opinion
HHDCV166067560S
02-08-2017
City of Hartford v. Premier Sports Management Group, LLC et al
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO STRIKE #117
Constance L. Epstein, J.
The defendants have moved to strike counts thirty-two through thirty-five, thirty-eight, and thirty-nine of the plaintiff's complaint on the ground that the counts are legally insufficient pursuant to applicable Connecticut law.
Background
On April 19, 2016, the plaintiff, the city of Hartford, filed a thirty-nine-count complaint against the defendants Premier Sports Management Group, LLC; Mitchell D. Anderson; Black Diamond Consulting Group, LLC; James C. Duckett, Jr.; Bruen Deldin Didio Associates, Inc.; Scott Hainey; and Jeffrey Deldin. As against the defendant Bruen Deldin Didio Associates, Inc. (BDDA), the complaint alleges abetting fraud, negligent misrepresentation, negligent supervision, and unfair trade and insurance practice under the Connecticut Unfair Insurance Practices Act (" CUIPA") pursuant to General Statutes § 38a-815 et seq. As against the defendant Jeffrey Deldin, the complaint alleges abetting fraud and unfair trade and insurance practices under CUIPA. The defendants BDDA and Jeffrey Deldin (collectively referred to as the defendants) move to strike these allegations against them.
In its complaint, the plaintiff alleges the following facts. In May 2014, the plaintiff issued a request for proposal (RFP) seeking bids for the management of the redevelopment of a Hartford sports stadium, Dillon Stadium; the development of an athletic field in nearby Colt Park; and the procurement of a soccer team to be based in the new Dillon Stadium (collectively referred to as the Dillon project). Premier Sports Management Group, LLC (PSMG) responded to the RFP, providing the plaintiff with a certificate of liability insurance (COI) in its response, identifying Ohio Mutual Insurance as the carrier and PSMG as the insured, along with the plaintiff as the additionally named insured. The COI listed the policy period as May 27, 2014 through May 27, 2015, identified the defendant BDDA as a producer, and bore the defendant Deldin's signature as the authorized representative.
The plaintiff selected PSMG to manage the Dillon project and entered into a formal contract dated September 18, 2014. As a condition of the agreement, PSMG was required to purchase and maintain insurance coverage for itself and the plaintiff, to be effective before work commenced and to remain in force until termination of work under the agreement. On September 19, 2014, PSMG sent an email to the plaintiff forwarding a COI, which reflected Providence Mutual COI as the carrier and the insureds to be PSMG and the plaintiff. The COI again listed the defendant BDDA as a producer, and bore the defendant Deldin's signature as the authorized representative.
According to plaintiff, based on these representations, the plaintiff moved forward on working with PSMG. It was later discovered, however, that Providence Mutual had e-mailed BDDA on September 18, 2014, stating that it would not provide coverage. Additionally, PSMG's insurance coverage with Ohio Mutual was cancelled on September 5, 2014, because PSMG did not meet its underwriting criteria. Despite the lack of any insurance coverage, the defendants issued the COI. Providence Mutual never subsequently issued an insurance policy to PSMG or the plaintiff.
In count thirty-two, the plaintiff alleges that the defendant BDDA knowingly assisted and thereby abetted PSMG's fraudulent representation that PSMG and the plaintiff were insured when the defendant BDDA issued the Providence Mutual COI. In count thirty-three, the plaintiff alleges that the defendant BDDA knew or should have known the true status of PSMG's insurance coverage and thus negligently misrepresented the insurance coverage status. In count thirty-four, the plaintiff alleges that defendant BDDA committed negligent failure to supervise when it failed to have adequate procedures and controls in place to prevent its officers, employees, and agents from issuing the inaccurate Providence Mutual COI, or to detect and correct the situation promptly thereafter.
In count thirty-five, the plaintiff alleges that the defendant BDDA violated CUIPA when it issued a false and misleading statement regarding insurance and withheld information regarding the cancellation of PSMG's insurance and the refusal of an insurance company to insure PSMG.
In count thirty-eight, the plaintiff alleges that the defendant Deldin abetted fraud when he personally implemented and participated in implementing the creation and issuance of the false Providence Mutual COI In count thirty-nine, the plaintiff alleges that the defendant Deldin violated CUIPA when he issued a false and misleading statement regarding insurance and withheld information regarding the cancellation of PSMG's insurance and the refusal of an insurance company to insure PSMG, nonetheless furnishing false insurance information to the plaintiff.
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). " 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." (Internal quotation marks omitted.) Coe v. Board of Education, 301 Conn. 112, 117, 19 A.3d 640 (2011). " 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, 693 A.2d 293 (1997). " [A] motion to strike challenges the legal sufficiency of a pleading and, consequently, requires no factual findings by the trial court . . . [The court] construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency . . . Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . . Moreover, [the court notes] that [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 a 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.) Geysen v. Securitas Security Services USA, Inc., 322 Conn. 385, 398, 142 A.3d 227 (2016). " If any facts provable under the express and implied allegations in the plaintiff's complaint support a cause of action . . . the complaint is not vulnerable to a motion to strike." Bouchard v. People's Bank, 219 Conn. 465, 471, 594 A.2d 1 (1991).
A
Aiding and Abetting Fraud
In their memorandum of law in support of the motion to strike, the defendants argue that counts thirty-two and thirty-eight should be stricken on the basis that the allegations fail to state a legally cognizable claim for abetting fraud against the defendants. Specifically, the defendants argue that the complaint fails to allege that the defendants knowingly and substantially assisted the principal fraud because the defendants' amount of assistance in the alleged fraud was substantially minimal; the defendants were entirely and completely absent during the commission of the tort; and, the defendants' relationship to the plaintiff was nonexistent. In addition, defendants argue that the complaint fails to allege that the defendants knew of and were complicit in PSMG's plan to defraud the plaintiff.
The plaintiff counters that it has sufficiently alleged facts to support a claim for aiding and abetting fraud, and thus the defendants' motion to strike should be denied. Specifically, the plaintiff contends that the complaint alleges that the defendants issued a COI which falsely represented that Providence Mutual issued an insurance policy to PSMG despite learning that Providence Mutual would not insure PSMG; that the defendants were aware that the insurance policy was required as a condition for PSMG to procure the Dillon project bid; and, that the defendants were aware that PSMG was highly likely to forward the COI to the plaintiff in order to proceed with the Dillon project. The plaintiff also contends that the issue of whether the defendants substantially assisted PSMG or minimally assisted PSMG involves factual issues.
" [A]iding-abetting includes the following elements: (1) the party whom the defendant aids must perform a wrongful act that causes an injury; (2) the defendant must be generally aware of his role as part of an overall illegal or tortious activity at the time that he provides the assistance; [and] (3) the defendant must knowingly and substantially assist the principal violation." (Internal quotation marks omitted.) Flannery v. Singer Asset Finance Co., LLC, 312 Conn. 286, 334, 94 A.3d 553 (2014).
In this case, counts thirty-two and thirty-eight of the plaintiff's complaint allege that the defendants assisted PSMG in its commission of fraud against the plaintiff when it provided the false Providence Mutual COI. The plaintiff alleges that the defendants knew the reliance would occur upon presenting the false COI; that the defendants were a producer and authorized representative of the false COI which induced the plaintiff to enter an agreement with PSMG; and, that the defendants misrepresented the existence of insurance with knowledge that such misrepresentation would induce the plaintiff to award the Dillon project to PSMG. As pleaded, the complaint adequately alleges that the defendants knowingly and substantially assisted the alleged fraud.
Because the plaintiff has sufficiently alleged that the defendants were a substantial factor in aiding the underlying fraud, the motion to strike counts thirty-two and thirty-eight of the plaintiff's complaint is denied.
B
CUIPA and CUTPA
The defendants argue that counts thirty-five and thirty-nine should be stricken on the basis that the CUIPA claims against the defendants are legally insufficient. Specifically, the defendants argue that the claims are unsustainable as a matter of law because the plaintiff does not allege the threshold fact that the defendants made an actionable misrepresentation or engaged in false advertising because a COI is not an affirmative representation of the existence of valid insurance coverage. The plaintiff counters that the motion to strike counts thirty-five and thirty-nine should be denied because the complaint alleges legally sufficient causes of action for liability under the Connecticut Unfair Trade Practices Act (CUTPA) based on a CUIPA violation.
Specifically, the plaintiff contends that the complaint alleges facts that demonstrate that the defendants made, issued, and circulated a statement that misrepresented the existence of an insurance policy purportedly issued by Providence Mutual Insurance Company, misrepresented the effective dates of the policy, and misrepresented the limits of liability under the policy.
" It is well established that CUTPA affords a private cause of action to individuals . . . [I]individuals may bring an action under CUTPA for violations of CUIPA. In order to sustain a CUIPA cause of action under CUTPA, a plaintiff must allege conduct that is proscribed by CUIPA." Nazami v. Patrons Mutual Ins. Co., 280 Conn. 619, 625, 910 A.2d 209 (2006). General Statutes § 38a-816(1) prohibits unfair practices in the business of insurance, which includes " [m]aking, issuing or circulating, or causing to be made, issued, or circulated, any . . . statement . . . which . . . [m]isrepresents the benefits, advantages, conditions or terms of any insurance policy . . ." Heyman Associates No. 1 v. Ins. Co. of Pennsylvania, 231 Conn. 756, 794, 653 A.2d 122 (1995) " Traditionally, an action for negligent misrepresentation requires the plaintiff to establish (1) that the defendant made a misrepresentation of fact, (2) that the defendant knew or should have known was false, and (3) that the plaintiff reasonably relied on the misrepresentation, and (4) suffered pecuniary harm as a result." Nazami v. Patrons Mutual Ins. Co., supra, 626.
In this case, the plaintiff has alleged sufficient facts to support a claim for misrepresentation under CUIPA. Count thirty-five of the complaint alleges that (1) the defendant BDDA misrepresented that PSMG was insured; (2) the defendant BDDA knew that the information was false; (3) the plaintiff reasonably relied on this information when hiring PSMG to work on the Dillon Project; and (4) the plaintiff suffered pecuniary harm as a result. Count thirty-nine alleges that (1) the defendant Deldin misrepresented that PSMG was insured; (2) the defendant Deldin knew that the information was false; (3) the plaintiff reasonably relied on this information when hiring PSMG to work on the Dillon Project; and (4) the plaintiff suffered pecuniary harm as a result.
The defendants cite to Nazami for the proposition that a COI does not misrepresent any facts concerning the existence of coverage because a COI is not a guarantee of the existence of coverage. In Nazami, a property owner signed a home improvement contract with a contractor after being presented with a COI procured by the contractor, naming the property owner as the " certificate holder." Nazami v. Patrons Mutual Ins. Co., supra, 280 Conn. 622. When filing a claim for water damage, the property owner learned that the insurance coverage had been cancelled for nonpayment of premiums. Id., 622-23. The property owner then brought suit against the insurance agency for violations of CUIPA and CUTPA, alleging that the insurance agent " knew, or should have known, that the [c]ertificate, as drafted, might lead [the property owner] to believe that . . . coverage was guaranteed until the policy expiration date." (Internal quotation marks omitted.) Id., 623. The Supreme Court found that " the certificate, on its face, specifically contemplates cancellation of the policy and alerts the certificate holder to the fact that the information contained therein was subject to all 'terms, exclusions and conditions' of the policy. Moreover, the certificate does not provide that the policy was paid in full for the entire one year term or that it was in any way guaranteed." Id., 628. Thus, the Court found that the plaintiff failed to allege any false statement made in the certificate. Id., 629.
The case at hand is factually dissimilar to Nazami in that in Nazami the certificate of insurance, which contained accurate information, led the property owner to conclude that the policy would continue to be in effect for the duration of the work to be performed. In the present case, the plaintiff alleges that the COI produced by the defendants misrepresented the existence of an insurance policy itself, the effective dates of the policy, and the limits of liability under the policy.
In further support of its contention that a COI could not properly support a CUIPA cause of action, the defendants cite Prudential Property & Casualty Ins. Co. v. Anderson, 101 Conn.App. 438, 922 A.2d 236, cert. denied, 283 Conn. 911, 928 A.2d 537 (2007) (Anderson ). In Anderson, homeowners entered a contract to construct a second story to their home after the contractor presented the homeowners with a COI. The next day, the homeowners suffered water damage to their home due to the contractor's negligence. The homeowners recovered from their homeowner's insurance policy, and that insurance company subsequently sought recovery under the policy provided by the contractor. It was later learned that approximately three weeks prior to the issuance of the contractor's COI, the insurance policy had been cancelled. An action for inducement and unethical business practices followed. Relying on the decision in Nazami, the court in Anderson also found that the COI in question was subject to the terms, exclusions, and conditions of the insurance policy, and thus the subsequent cancellation of a valid COI did not constitute a misrepresentation. Id., 449.
In the present case, however, it is alleged that a valid COI never existed. The defendants allegedly provided a COI that misrepresented the existence of an insurance policy, misrepresented the effective dates of the policy, and misrepresented the limits of liability under the policy. Thus, Anderson is not applicable to this case as a basis for a motion to strike.
The motions to strike counts thirty-five and thirty-nine are denied.
C
Negligent Misrepresentation
The defendant BDDA argues that count thirty-three should be stricken on the basis that the negligent misrepresentation claim is barred by Nazami and Anderson . Specifically, neither the Ohio Mutual nor the Providence Mutual COIs were representations of the existence of valid insurance coverage for PSMG, and thus no misrepresentation occurred. In its memorandum of opposition, the plaintiff counters that the motion to strike count thirty-three should be denied because the complaint alleges a legally sufficient cause of action for negligent misrepresentation. Specifically, the plaintiff contends that count thirty-three alleges facts that support its contention that the defendant BDDA misrepresented that a policy of insurance had been issued by Providence Mutual and that PSMG and the plaintiff were insured under the policy as required by the agreement. Furthermore, plaintiff claims that BDDA knew the statements were false, and that the plaintiff reasonably relied on the misrepresentation and suffered pecuniary harm as a result.
" [Connecticut courts have] long recognized liability for negligent misrepresentation. [The courts] have held that even an innocent misrepresentation of fact may be actionable if the declarant has the means of knowing, ought to know, or has the duty of knowing the truth . . . The governing principles are set forth in similar terms in § 522 of the Restatement Second of Torts [1979]: One who, in the course of his business, profession or employment . . . supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information." (Internal quotation marks omitted.) Glazer v. Dress Barn, Inc., 274 Conn. 33, 72-73, 873 A.2d 929 (2005). An action for negligent misrepresentation requires the plaintiff to establish that (1) the defendant made a misrepresentation of fact, (2) the defendant knew or should have known the representation was false, (3) the plaintiff reasonably relied on the misrepresentation, and (4) the plaintiff suffered pecuniary harm as a result." Nazami v. Patrons Mutual Ins., Co., supra, 280 Conn. 626.
In its complaint, the plaintiff alleges that the defendant BDDA made false statements that were untrue and known to be untrue at the time they were made, causing the plaintiff to rely on the misrepresentation, which ultimately resulted in pecuniary harm.
The plaintiff has sufficiently alleged the elements necessary to state a cause of action sounding in negligent misrepresentation and, therefore the motion to strike count thirty-three is denied.
D
Negligent Failure to Supervise
The defendant BDDA argues that count thirty-four should be stricken on the ground that the plaintiff's negligent failure-to-supervise claim fails as a matter of law because the plaintiff does not allege an actionable underlying misrepresentation by the defendant BDDA. Specifically, the defendant BDDA argues that neither the Ohio Mutual COI nor the Providence Mutual COI were representations of the existence of valid insurance coverage for PSMG, and thus the plaintiff cannot claim that the conduct of any one of the defendant BDDA's employee was tortious, thereby defeating the plaintiff's negligent supervision claim. In its memorandum of opposition, the plaintiff counters that count thirty-four alleges facts that establish an underlying misrepresentation, and thus has set forth a legally viable claim for negligent misrepresentation. Specifically, the plaintiff contends that the issuance of a COI containing false information about the existence of an insurance policy and the identity of the insureds under the policy was the underlying misrepresentation, which occurred due to the defendant BDDA's lack of adequate procedures and controls.
" Under Connecticut law, an employer may be held liable for the negligent supervision of employees." Seguro v. Cummiskey, 82 Conn.App. 186, 191, 844 A.2d 224 (2004). See also Gutierrez v. Thorne, 13 Conn.App. 493, 537 A.2d 527 (1988) (recognizing negligent supervision as an independent cause of action against an employer when vicarious liability cannot be maintained). An essential element to the tort of negligent supervision is that the conduct of the employee whom the employer is accused of failing to supervise was itself tortious. The majority of Superior Court decisions considering the issue have required the plaintiff in a negligent supervision action to plead injury by a defendant's negligence in failing to properly supervise an employee whom the defendant had a duty to supervise and whom the defendant knew or should have known would cause the injury. In any claim for negligent hiring, a plaintiff must allege facts that support the element of forseeability. Gutierrez v. Thorne, supra, 500. In the present case, the plaintiff has failed to allege facts that support the element of foreseeability in its claim of negligent supervision against the defendant BDDA. In count thirty-four, the plaintiff has merely alleged that it " failed to exercise reasonable care, by failing to have adequate procedures and controls in place to prevent its . . . employees . . . from issuing the inaccurate Providence Mutual certificate, or to detect and correct the situation promptly thereafter." There is no allegation in count thirty-four that suggests that the defendant BDDA knew or should have known that its employees had a propensity to engage in the alleged harmful conduct. Without alleging facts that support the element of foreseeability, the plaintiff has not sufficiently pleaded a claim for negligent supervision. Therefore, the court grants the motion to strike as to count thirty-four.
Conclusion
For the foregoing reasons, defendants' motion to strike count thirty-four is granted and the motions to strike counts thirty-two, thirty-three, thirty-five, thirty-eight, and thirty-nine are denied.
SO ORDERED.