Opinion
No. AAN CV07 5003003
May 16, 2008
MEMORANDUM OF DECISION
The plaintiff, Double G.G. Leasing, LLC (hereafter the plaintiff or the LLC) brings this action to recover damages for a fire loss pursuant to an insurance policy issued by the defendant, Underwriters at Lloyds, London. The first count is for breach of the insurance contract based on the defendant's refusal to pay the loss. The second count is for breach of the implied covenant of good faith and fair dealing based on the defendant's conduct in impeding its right to receive benefits under the policy. The defendant has moved for summary judgment on both counts of the complaint based on the plaintiff's alleged failure to produce documents pursuant to the cooperation provision in the policy.
"Summary judgment is a method of resolving litigation when 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." Wilson v. New Haven, 213 Conn. 277 279, 567 A.2d 829 (1989); see Practice Book § 17-49. "In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Serrano v. Burns, 248 Conn. 419, 424, 727 A.2d 1276 (1999). "[T]he court's function is not to decide issues of material fact, but rather to determine whether any such issues exist." Nolan v. Borkowski, 206 Conn. 495, 500, 538 A.2d 1031 (1988). "The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . ." (Citation omitted; internal quotation marks omitted.) Dowling v. Finley Associates, Inc., 248 Conn. 364, 370, 727 A.2d 1245 (1999).
"Although the party seeking summary judgment has the burden of showing the nonexistence of any material fact . . . a party opposing summary judgment must substantiate its adverse claim by showing that there is a genuine issue of material fact together with the evidence disclosing the existence of such an 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 [in support of a motion for summary judgment]." (Internal quotation marks omitted.) Maffucci v. Royal Park Ltd. Partnership, 243 Conn. 552, 554-55, 707 A.2d 15 (1998). "The existence of the genuine issue of material fact must be demonstrated by counter affidavits and concrete evidence." (Internal quotation marks omitted.) Pion v. Southern New England Telephone Co., 44 Conn.App. 657, 663, 691 A.2d 1107 (1997); see also Practice Book § 17-45.
The affidavits and other documentary proof establish the following facts. At all relevant times, Carl Glatzel, Jr. (Glatzel) was the sole member, owner and manager of the LLC. On February 25, 2005, the LLC purchased real property in New Milford, CT from John Duda and the Judith Duda Living Trust (collectively "Duda") on which was situated a vacant two-family residential structure. The purchase price was $550,000. The purchase was financed largely by Duda and secured by an open-end mortgage on the property. The LLC obtained an insurance policy from the defendant that insured the LLC against, inter alia, physical loss or damage to the property by fire for the period of March 19, 2005 to September 19, 2005. Pursuant to the policy, the defendant agreed to provide coverage for the structure with a policy limit of $360,000 on a replacement cost basis. On April 24, 2005, less than five weeks after the commencement of the policy period, the building was destroyed by fires of incendiary origin that were ignited at two separate locations at the rear of the building with the use of flammable liquid accelerant.
During the summer of 2005, Duda served the LLC and Glatzel with a notice of lis pendens and an action to foreclose the mortgage.
There is no evidence that the foreclosure action was returned to court.
In early 2006, Glatzel had marital problems. For this reason he transferred title to the property from the LLC to his father (Glatzel, Sr.) unbeknownst at the time to his father. Glatzel, however, maintained control of the property and of the LLC. In June 2006, Glatzel, Sr. conveyed all of his interest in the LLC back to Glatzel. On or about June 26, 2006, Glatzel sold the property for $625,000.
By letter dated April 19, 2005, the defendant notified the plaintiff's attorney that it would require Glatzel's examination under oath and production of documents at the examination. The plaintiff's attorney requested three continuances of the examination. After three more letters from the defendant's attorney, Glatzel appeared for the examination on December 7, 2006. He answered many questions but stated that he did not know the answers to others and did not produce many of the requested documents at that time. He produced some documents subsequent to his examination. However, though he admitted at his examination that he had filed personal income tax returns, he never produced them.
Glatzel, Sr. also submitted to an examination under oath on December 7, 2006. He indicated that the property was his son's and that he was not involved in its management.
Part E of the insurance policy between the plaintiff and the defendant, which is entitled "Loss Conditions," provided as follows.
3. Duties in the Event Of Loss Or Damage
a. You must see that the following are done in the event of loss or damage to Covered Property . . . (5) At our request, give us complete inventories of the damaged and undamaged property.
Include quantities, costs, values and amount of loss claimed.
(6) As often as may be reasonably required, permit us to . . . examine your books and records . . .
(8) Cooperate with us in the investigation or settlement of the claim.
b. We may examine any insured under oath, while not in the presence of any other insured and at such times as may be reasonably required, about any matter relating to this insurance or the claim, including an insured's books and records. In the event of an examination, an insured's answers must be signed.
The Commercial Property Conditions section of the policy further provided: "No one may bring an action against us under this Coverage Part unless: 1. There has been full compliance with all of the terms of this Coverage Part . . ."
Additional facts will be set forth as necessary.
The defendant moves for summary judgment based on the plaintiff's failure to comply with these duties. Specifically, the defendant contends that the plaintiff failed to provide it with the documents that the defendant requested, especially Glatzel's individual state and federal income tax returns. The plaintiff argues that the motion should be denied because (1) the policy language binds only the insured, that is, the plaintiff, and not persons who are not named as insureds on the policy, and (2) the plaintiff has made a reasonable effort to perform its obligations under the policy. The gist of the motion devolves to the question of whether Glatzel was required to produce his personal income tax returns.
I
Preliminarily, the plaintiff argues that the defendant's motion for summary judgment should be denied because the requirement that an insured submit to an examination under oath did not require Glatzel to answer questions or to produce documents pertaining to his personal affairs as opposed to corporate matters. More specifically, the plaintiff argues that the only insured listed in the policy is the LLC and that if there is any ambiguity as to the duties imposed by the policy, that ambiguity must be construed against the defendant insurer in accordance with well-settled principles of insurance policy construction. The defendant contends that the plaintiff's argument is based on the mistaken premise that the policy is to be interpreted according to principles of insurance contract interpretation, which is not so because the language at issue is mandated by statute. The court agrees with the plaintiff that the language of the insurance policy did not impose obligations on Glatzel to disclose purely personal information or personal tax returns.
A.
First, the court addresses the defendant's argument that because the language in the insurance contract is mandated by statute, the "contra preferentum rule," by which language in such a contract is construed against the insurer, is inapplicable. If the defendant is correct, the court must engage in statutory rather than contract interpretation.
The defendant's argument is based on the provisions of General Statutes § 38a-307 and General Statutes § 38a-308. "The Connecticut legislature has enacted a standard form of fire insurance, with which all fire insurance policies issued in this state must conform. See General Statutes § 38a-308." Wasko v. Manella, 269 Conn. 527, 535, 849 A.2d 777 (2004). General Statutes § 38a-308(a) provides in relevant part: "No policy or contract of fire insurance shall be made, issued or delivered by any insurer or any agent or representative thereof, on any property in this state, unless it conforms as to all provisions, stipulations, agreements and conditions with the form of policy set forth in section 38a-307 . . ." General Statutes § 38a-307 provides that "the standard form of fire insurance policy of the state of Connecticut . . . shall be as follows . . ." The standard form policy then contains, inter alia, the following provision in the section entitled "Requirements in case loss occurs": "The insured, as often as may be reasonably required, shall exhibit to any person designated by this Company all that remains of any property herein described, and submit to examinations under oath by any person named by this Company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices and other vouchers, or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by this Company or its representative, and shall permit extracts and copies thereof to be made." See Bocchino v. Nationwide Mutual Fire Insurance Company, 246 Conn. 378, 380, 716 A.2d 883 (1998).
Courts in other jurisdictions have held that "[t]he usual rule of construction most favorable to the insured does not apply to a provision required by statute." Laidlaw v. Commercial Ins. Co. of Newark, 255 N.W.2d 807, 811 (Minn. 1977); accord, Hartford Accident Indemnity Co. v. Pro-Football, Inc., 127 F.3d 1111, 1114 (D.C. Cir. 1997), cert. denied, 523 U.S. 1077, 118 S.Ct. 1522, 140 L.Ed.2d 673 (1997); Hofkin v. Provident Life Accident Ins. Co., 81 F.3d 365, 369 (3d Cir. 1996); Utah Home Fire Ins. Co. v. Colonial Ins. Co., 300 Or. 564, 580, 715 P.2d 1112 (1986) (Peterson, J., dissenting); Wall v. Pennsylvania Life Ins. Co., 274 N.W.2d 208, 213 (N.D. 1979); Midwest Triangle Paint Works, Inc. v. Firemen's Ins. Co., 36 Ill.App.2d 65, 69, 183 N.E.2d 562 (1962); Herbert L. Farkas Co. v. New York Fire Ins. Co., 5 N.J. 604, 611, 76 A.2d 895 (1950); Wilcox v. Massachusetts Protective Ass'n., 266 Mass. 230, 235, 165 N.E. 429 (1929); Rosenthal v. Ins. Co. of North America, 158 Wis. 550, 557, 149 N.W. 155 (1914); Mick v. Corp. of Royal Exchange Assurance of London, 87 N.J.L. 607, 611, 91 A. 102 (E.A. 1914); Hamilton v. Royal Ins. Co., 156 N.Y. 327, 336-37, 50 N.E. 863 (1898); 2 G. Couch, Insurance (3d Ed. 1995) § 22:15 ("The rule of construction against the insurer does not apply where . . . the language was prescribed by statute and controlled by Division of Insurance rather than the individual insurer."); 2 E. Holmes, Appleman on Insurance (2d Ed. 1996) § 6.1, p. 182. This rule has been implicitly adopted in Connecticut by virtue of the fact that, when confronted with the interpretation or application of policy language derived from the mandatory provisions of General Statutes § 38a-308, Connecticut appellate courts have engaged in statutory construction, not contract interpretation. See Wasko v. Manella, supra, 269 Conn. 536-39; Lees v. Middlesex Ins. Co., 219 Conn. 644, 650-55, 594 A.2d 952 (1991); Covenant Ins. Co. v. Banks, 177 Conn. 273, 276-81, 413 A.2d 862 (1979).
However, the legislature has not mandated conformance with the standard form fire insurance policy in all instances. General Statutes § 38a-308(b) provides: "Any policy or contract which includes, either on an unspecified basis as to coverage or for an indivisible premium, coverage against the peril of fire and substantial coverage against other perils need not comply with the provisions of subsection (a) hereof, provided (1) such policy or contract shall afford coverage, with respect to the peril of fire, not less than the substantial equivalent of the coverage afforded by said standard fire insurance policy, (2) the provisions in relation to mortgagee interests and obligations in said standard fire insurance policy shall be incorporated therein without change, (3) such policy or contract is complete as to all of its terms without reference to any other document and (4) the commissioner is satisfied that such policy or contract complies with the provisions hereof."
The insurance policy in this case clearly does not resemble the standard form of fire insurance policy of General Statutes § 38a-307. Rather, it is a comprehensive commercial building and personal property insurance policy, insuring against physical loss or damage to the insured's building and business personal property caused not only by fire but by lighting, explosion, windstorm, hail, smoke, aircraft, riot, vandalism, sprinkler leakage, sinkhole and volcanic action. Moreover, the policy is complete as to all of its terms without reference to any other document and incorporates the substance of the provisions of the standard form policy with respect to mortgagee interests and obligations. Although there is no evidence as to whether the Insurance Commissioner "is satisfied that such policy or contract complies with the provisions of General Statutes § 38a-307, on this record it is inappropriate to give the insurer the benefit of the standard that applies to policies that conform to the statutory standard form of fire insurance policy, since the policy that the defendant issued is most certainly, and thoroughly, not such a policy nor intended to be one. Accordingly, the court construes the "examination under oath" provision of this policy according to the principles governing the construction of insurance policies and not accordingly to the rules of statutory interpretation.
The standard fire insurance policy in General Statutes § 38a-307 states with respect to mortgagee interests and obligations: "Mortgagee interests and obligations. If loss hereunder is made payable, in whole or in part, to a designated mortgagee not named herein as the insured, such interest in this policy may be cancelled by giving to such mortgagee a ten days' written notice of cancellation.
"If the insured fails to render proof of loss such mortgagee, upon notice, shall render proof of loss in the form herein specified within sixty (60) days thereafter and shall be subject to the provisions hereof relating to appraisal and time of payment and of bringing suit. If this Company shall claim that no liability existed as the mortgagor or owner, it shall, to the extent of payment of loss to the mortgagee, be subrogated to all the mortgagee's rights of recovery, but without impairing mortgagee's right to sue; or it may pay off the mortgage debt and require an assignment thereof and of the mortgage. Other provisions relating to the interests and obligations of such mortgagee may be added hereto by agreement in writing."
The policy here, on the other hand, provides as follows in Part F, which is entitled "Additional Conditions":
2. Mortgageholders
a. The term mortgageholder includes trustee.
b. We will pay for covered loss of or damage to buildings or structures to each mortgage-holder shown in the Declarations in their order of precedence, as interests may appear.
c. The mortgageholder has the right to receive loss payment even if the mortgageholder has started foreclosure or similar action on the building or structure.
d. If we deny your claim because of your acts or because you have failed to comply with the terms of this Coverage Part, the mortgageholder will still have the right to receive loss payment if the mortgageholder:
(1) Pays any premium due under this Coverage Part at our request if you have failed to do so;
CT Page 8420
(2) Submits a signed, sworn proof of loss within 60 days after receiving notice from us of your failure to do so; and
(3) Has notified us of any change in ownership, occupancy or substantial change in risk known to the mortgageholder.
All of the terms of this Coverage Part will then apply directly to the mortgageholder.
e. If we pay the mortgageholder for any loss or damage and deny payment to you because of your acts or because you have failed to comply with the terms of this Coverage Part:
(1) The mortgageholder's rights under the mortgage will be transferred to us to the extent of the amount we pay; and
(2) The mortgageholder's right to recover the full amount of the mortgageholder's claim will not be impaired.
At our option, we may pay to the mortgageholder the whole principal on the mortgage plus any accrued interest. In this event, your mortgage and note will be transferred to us and you will pay your remaining mortgage debt to us.
f. If we cancel this policy, we will give written notice to the mortgageholder at least:
(1) 10 days before the effective date of cancellation if we cancel for your non-payment of premium; or
(2) 30 days before the effective date of cancellation if we cancel for any other reason.
g. If we elect not to renew this policy, we will give written notice to the mortgageholder at least 10 days before the expiration date of this policy.
B.
"We begin our analysis with the general principles governing the construction of insurance policies. An insurance policy is to be interpreted by the same general rules that govern the construction of any written contract and enforced in accordance with the real intent of the parties as expressed in the language employed in the policy . . . The policy words must be accorded their natural and ordinary meaning . . . Under well established rules of construction, any ambiguity in the terms of an insurance policy must be construed in favor of the insured because the insurance company drafted the policy . . . This rule of construction may not be applied, however, unless the policy terms are indeed ambiguous . . .
"[A] contract is ambiguous if the intent of the parties is not clear and certain from the language of the contract itself . . . The contract must be viewed in its entirety, with each provision read in light of the other provisions . . . and every provision must be given effect if it is possible to do so . . . If the language of the contract is susceptible to more than one reasonable interpretation, the contract is ambiguous . . . The fact that the parties interpret the terms of a contract differently, however, does not render those terms ambiguous . . . Rather, whether a contract is ambiguous is a question of law for the court . . . Accordingly, we turn first to the language of the policy." (Citations omitted; internal quotation marks omitted.) Enviro Express, Inc. v. AIU Ins. Co., 279 Conn. 194, 199-200, 901 A.2d 666 (2006).
The defendant relies on the following provisions of Part B of the policy.
3. Duties in the Event Of Loss Or Damage
a. You must see that the following are done in the event of loss or damage to Covered Property . . .
(5) At our request, give us complete inventories of the damaged and undamaged property. Include quantities, costs, values and amount of loss claimed.
(6) As often as may be reasonably required, permit us to . . . examine your books and records . . .
(8) Cooperate with us in the investigation or settlement of the claim.
CT Page 8399
b. We may examine any insured under oath, while not in the presence of any other insured and at such times as may be reasonably required, about any matter relating to this insurance or the claim, including an insured's books and records. In the event of an examination, an insured's answers must be signed.
The policy further provides: "Throughout this policy the words `you' and `your' refer to the Named Insured shown in the Declarations." The only insured identified in the declarations pages is the plaintiff, Double G.G. Leasing, LLC.
The plaintiff does not dispute that Glatzel, as sole owner and manager of the LLC, may be required to submit to an examination. Obviously, "the legal entity known as a `corporation' could not speak for itself, but only through its agents." Lieberman v. Reliable Refuse Co., 212 Conn. 661, 673, 563 A.2d 1013 (1989). Indeed, Glatzel appears to be the only person who could speak for the plaintiff in an informed manner.
The policy provisions are unambiguous. See, e.g., Kitmirides v. Middlesex Mutual Assurance Co., 65 Conn.App. 729, 734, 783 A.2d 1079 (2001) (because definition of "insured" and "you" were clearly stated, policy provision re coverage was unambiguous), aff'd, 260 Conn. 336, 796 A.2d 1185 (2002). That a human representative must speak for the LLC does not alter the reality that the "duties in the event of loss or damage" prescribed by the policy are imposed on the LLC, and not on its members or owners. It follows that the member or officer who appears for the LLC at an examination under oath need not answer questions about his personal life nor produce personal papers such as personal tax returns. Were there any doubt as to this, it is underscored by the following language of part E.3.b. of the policy: "We may examine any insured under oath . . . about any matter relating to this insurance or the claim, including an insured's books and records." (Emphasis added.) Therefore, the insurance policy did not require Glatzel to disclose his personal income tax returns.
Admittedly, the line between personal and business information may be blurred for a close corporation or an LLC. See Rice v. United States, United States District Court, Civil Action No. 00-2960 (JR) (D.D.C. August 27, 2007). This is not so here, where the essential dispute is over whether Glatzel must disclose his individual income tax returns.
Even if the court were to find that the policy provisions at issue were ambiguous, it would reach the same result. "Under well established rules of construction," as stated supra, "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.) Enviro Express, Inc. v. AIU Ins. Co., supra, 279 Conn. 199. This is the "contra preferentum" rule that the plaintiff asserts. "Courts in such situations often apply the contra preferentum rule and interpret a policy against the insurer . . ." (Internal quotation marks omitted.) Hartford Accident Indemnity Co. v. Ace American Reinsurance Co., 284 Conn. 744, 755, 936 A.2d 244 (2007). "The premise behind the rule is simple. The party who actually does the writing of an instrument will presumably be guided by his own interests and goals in the transaction. He may choose shadings of expression, words more specific or more imprecise, according to the dictates of these interests . . . A further, related rationale for the rule is that [s]ince one who speaks or writes, can by exactness of expression more easily prevent mistakes in meaning, than one with whom he is dealing, doubts arising from ambiguity are resolved in favor of the latter." (Internal quotation marks omitted.) David M. Somers Associates, P.C. v. Busch, 283 Conn. 396, 405 n. 10, 927 A.2d 832 (2007). Construing the terms of the policy that impose duties in the event of loss or damage in favor of the insured results in those duties being imposed on the plaintiff, the insured, and on no one else. See Florida Gaming Corp. v. Affiliated FM Ins. Co., 502 F.Sup.2d 1257, 1263 (S.D.Fl. 2007) (ambiguity in post-loss obligations of insured under policy requires court "to read the term `the insured' in a narrow manner.").
"If the policy is ambiguous, extrinsic evidence may be introduced to support a particular interpretation." (Internal quotation marks omitted.) Metropolitan Life Ins. Co. v. Aetna Casualty Surety Co., 255 Conn. 295, 306, 765 A.2d 891 (2001). Neither party offers such evidence here.
This case is distinguishable from Hansen v. Ohio Casualty Co., 239 Conn. 537, 687 A.2d 1262 (1996), in which the court held that the plaintiff's decedent was entitled to underinsured motorist (UM) benefits, as a covered insured, pursuant to a garage insurance policy issued by the defendant insurer to a closely held corporation owned and operated by the plaintiff and her husband, the decedent. The UM endorsement provided that the insurer would pay "all sums the `insured' is legally entitled to recover as compensatory damages from the owner or driver of an `uninsured motor vehicle.' The damages must result from `bodily injury' sustained by the `insured' . . ." Id., 541. For purposes of UM coverage, the UM endorsement further provided that an insured included "If you are an individual, any family member . . ." In addition, the policy provided that "`Family member' means a person related to you by blood or marriage or adoption who is resident of your household . . ." Id., 542. Finally, the policy contained an exclusion for "`[b]odily injury' sustained by you or any `family member' while `occupying' or struck as a pedestrian by an `uninsured motor vehicle' that you own . . ." Id., 541. Although the declarations of the policy in Hansen named only the corporation as the insured, the Supreme Court held that the combination of individual and family oriented language "interspersed throughout the uninsured motorist endorsement provided to the corporation injected confusion and uncertainty into the coverage afforded by the policy." (Emphasis in original.) Id., 548. Finding the policy provisions ambiguous, the court construed them against the insurer and found that there was UM coverage for the plaintiff's decedent. To do otherwise, the court explained, would render superfluous the definitional part of the UM endorsement. Id., 547-48. The court observed that "`[i]n some of the coverage disputes involving underinsured motorist insurance, claims have been sustained for individuals on the rationale that when an insurance company elects to use "family-oriented language" in insurance policies issued to partnerships and corporations, such coverage terms are reasonably susceptible of more than one interpretation and, therefore, they will be construed strictly against the insurer and liberally in favor of the insured . . .' 3 A. Widiss, Uninsured and Underinsured Motorist Insurance (2d Ed. 1995) § 33.3, p. 69." Hansen v. Ohio Casualty Co., supra, 239 Conn. 547.
Here, on the other hand, there is no such contradictory or "family-oriented language" in the policy that would render the identity of the insured susceptible to multiple interpretations. The insured is identified in the policy as the plaintiff and the duty of cooperation, the duty to submit to an examination under oath and the duty to produce documents is imposed on the insured. There is no ambiguity. However, even assuming there were ambiguity, the issue in Hansen v. Ohio Casualty Co., supra, 239 Conn. 537, was coverage. The issue here relates to the obligations of the insured after a loss. Construing ambiguity against the insurer resulted in expanding coverage in Hansen; here, it requires restricting the duties that the insured has to the insurer.
This court's conclusion that the policy is unambiguous in not requiring Glatzel to produce his personal records finds support in Glados, Inc. v. Reliance Ins. Co., 888 F.2d 1309 (11th Cir. 1987), cert. denied, 497 U.S. 1025, 110 S.Ct. 3273, 111 L.Ed.2d 783 (1990). There, the defendant insurer issued a policy to the plaintiff, Glados, Inc., insuring a restaurant against fire damage. The plaintiff corporation was wholly owned and operated by a married couple, the Addisons. The wife was the sole stockholder, the husband the general manager. The restaurant was damaged by fire and the plaintiff made a claim on the policy. The defendant refused to pay, claiming that the husband had set the fire, and that the plaintiff had breached the policy by refusing to cooperate with the defendant's investigation. The plaintiff then filed suit. A jury found in favor of the plaintiff and the defendant appealed. On appeal, the defendant claimed, inter alia, that the district court erred in denying its motion for a directed verdict because the plaintiff had breached the cooperation clause in the policy when the Addisons refused to turn over their personal financial records.
In Glados, the court observed that the insurance policy provided "that when a loss occurs, `the Insured shall . . . submit to examination under oath' and that `[Reliance Insurance Co.] may examine and audit the Named Insured's books and records at any time during the policy period and extensions and within three years after the final termination of this policy, as far as they relate to the subject matter of this insurance.' The face of the policy lists only Glados, Inc. as the `Named Insured,' gives the restaurant address as the `Named Insured's Address,' and describes the `Named Insured' as a corporation. Nowhere does the policy indicate that the Addisons, in their individual capacity, are to be treated in the same manner as the named insured." Id., 1313.
In this case, although the insurance policy lists Glatzel's address as the address of the insured, the plaintiff's sole holding is the vacant property, and not an ongoing business, as in Glados.
The defendant nonetheless contended that because the plaintiff was wholly owned by Mrs. Addison, the personal financial records of the Addisons were highly relevant to the defendant's arson defense and were covered by the cooperation clause. Id. The Eleventh Circuit disagreed and held: "The insurance policy is between Reliance and Glados, Inc., a corporation. The language of the cooperation clause is unambiguous, and requires only the `Named Insured' to provide relevant documents to Reliance. Under the terms of this policy, we cannot conclude that the Addisons were obligated to provide their personal records." Id., 1313-14.
Admittedly, a contrary view has been taken by New York. See 2423 Mermaid Realty Corp. v. New York Property Insurance Underwriting Association, 142 A.D.2d 124, 534 N.Y.S.2d 999 (1988), cert. denied, 74 N.Y.2d 607, 543 N.E.2d 746, 545 N.Y.S.2d. 103 (1989). In Mermaid Realty, the issue was "whether the principal of a closely held corporation should be required to submit his personal income tax returns for inspection and copying by the insurer on a claim for fire losses or otherwise risk an invalidation of the underlying policy where the subject fire was incendiary in nature." Id., 125-26. The court answered this question in the affirmative based on two factors: (1) the materiality of the personal income tax returns of the principal of a closely held corporation to his motive to start the fire, and (2) a holding, previously established by case law, that in an examination under oath in connection with an incendiary fire loss, a principal of a close corporation cannot exercise the fifth amendment privilege as to his or her personal income tax matters without forfeiting the corporation's coverage under the insurance policy. Id., 142 A.D.2d 130-34.
That information as to the personal affairs of a principal of a closely held corporation making a claim for an incendiary loss under a fire insurance policy may be highly relevant is not doubted. It is, however, beside the point as to the contract interpretation question of whether the insurer has a contract right to inquire of the principal's personal affairs. The second factor on which the holding in Mermaid Realty rests, that close corporations "necessarily co-operate or fail to do so because of the actions of their agents in submitting to the examination"; Dyno-Bite, Inc. v. Travelers Cos., 80 A.D.2d 471, 475, 439 N.Y.S.2d 558, appeal dismissed, 54 N.Y.2d 1027 (1981); excessively conflates the conduct of the corporation with that of its principal, confuses the contract interpretation issue with the issue of whether or not the corporate veil ought to be pierced, and avoids the knotty issues of insurance contract interpretation.
Confining the obligations imposed under the "Duties in the Event Of Loss Or Damage" clause of this non-standard form insurance policy to the insured, and not extending those duties so as to require the insured's principal to disclose his personal tax returns, accords with the canons of insurance contract interpretation discussed supra. "It is the function of the court to construe the provisions of the contract of insurance"; (internal quotation marks omitted) Bonito v. Cambridge Mutual Fire Ins. Co., 64 Conn.App. 487, 489, 780 A.2d 984, cert. denied, 258 Conn. 926, 783 A.2d 1028 (2001); not to rewrite them. Hammer v. Lumberman's Mutual Casualty Co., 214 Conn. 573, 591, 573 A.2d 699 (1990). If the defendant had desired to impose obligations on the plaintiff's principals, it could have fashioned policy language that would have done so. Not having done so, it "cannot be permitted to remake [its] contract at this time." Fisk v. Shore Line Electric Ry. Co., 87 Conn. 209, 218, 87 A. 876 (1913). The court holds that under the policy, Glatzel had no duty to disclose purely personal information or personal income tax returns to the defendant.
II
The defendant, however, carries another arrow in its quiver. It argues that the plaintiff and Glatzel were one and the same, and that the court should disregard the company, or corporate, fiction and pierce the company veil. The court agrees.
The plaintiff does not join issues with this argument.
"Courts will . . . disregard the fiction of a separate legal entity to pierce the shield of immunity afforded by the corporate structure in a situation in which the corporate entity has been so controlled and dominated that justice requires liability to be imposed on the real actor . . . [Our Supreme Court has] affirmed judgments disregarding the corporate entity and imposing individual stockholder liability when a corporation is a mere instrumentality or agent of another corporation or individual owning all or most of its stock." (Citations omitted; internal quotation marks omitted.) Angelo Tomasso, Inc. v. Armor Construction Paving, Inc., 187 Conn. 544, 552-53, 447 A.2d 406 (1982).
"It is undisputed that in Connecticut a court will disregard the corporate structure and pierce the corporate veil only under exceptional circumstances, for example, where the corporation is a mere shell, serving no legitimate purpose, and used primarily as an intermediary to perpetuate fraud or promote injustice." (Internal quotation marks omitted.) SFA Folio Collections, Inc. v. Bannon, 217 Conn. 220, 230, 585 A.2d 666, cert. denied, 501 U.S. 1223, 111 S.Ct. 2839, 115 L.Ed.2d 1008 (1991). "This state recognizes two theories under which it will permit the protection of the corporate structure to be set aside. Those theories also apply to the protection afforded by a limited liability company . . . The instrumentality [rule] requires, in any case but an express agency, proof of three elements: (1) Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of [the] legal rights [of the party seeking to pierce the corporate veil]; and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of . . . The second theory is the identity rule. If [the party seeking to pierce the corporate veil] can show that there was such a unity of interest and ownership that the independence of the corporations had in effect ceased or had never begun, an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise." (Citations omitted; emphasis in original; internal quotation marks omitted.) Morris v. Cee Dee, LLC, 90 Conn.App. 403, 414-15, 877 A.2d 899, cert. granted, 275 Conn. 929, 883 A.2d 1245 (2005). Both theories "involve fact based determinations . . ." Litchfield Asset Management Corp. v. Howell, 70 Conn.App. 133, 148, 799 A.2d 298, cert. denied, 261 Conn. 911, 806 A.2d 49 (2002); see Angelo Tomasso, Inc. v. Armor Construction Paving, Inc., supra, 187 Conn. 561 ("The issue of whether the corporate veil is pierced presents a question of fact.").
The defendant argues that Glatzel was the LLC's sole owner, manager and stockholder, that the LLC existed merely to enable Glatzel to purchase the property and put it in a corporate name, that the LLC was not properly incorporated at the time of the fire and did not have a bank account, and that Glatzel allowed his personal affairs to dictate the corporate affairs.
The defendant cannot pierce the corporate veil by way of the instrumentality theory because there is no evidence that Glatzel used his control of the LLC to commit a fraud or wrong or violation of a legal duty owing the defendant or that Glatzel thereby committed a dishonest or unjust act in contravention of the defendant's legal rights. The specific transaction at issue here arises out of an insurance contract. There is no evidence that this transaction was tainted by fraud. It is true that Glatzel conveyed his interest in the LLC to his father when his wife threatened to divorce him, but this did not defraud the defendant.
Turning to the identity theory, the defendant observes that the LLC existed to purchase properties and that the only property purchased was the one that the defendant insured. The court finds this fact thoroughly unremarkable.
The defendant also points to the following answer given by Glatzel at his deposition in response to a question as to how long the LLC had been in existence.
I'm going to say a year prior to this one. There was never nothing in it. There was not even a bank account prior to this, because I told you, the lawyer I had was supposed to take care of all the paperwork, and he was trying to be a shyster. What he did was he never got no numbers. I thought the company was up and running. I don't even have a corporatebook on this company now.
Glatzel subsequently identified the attorney to whom he referred as Ronald Bozelko. The defendant argues that Bozelko's failure to establish the LLC prior to the fire and his knowledge that it had not been established ought to be imputed to the LLC and Glatzel. In fact, a document submitted by the plaintiff in opposition to the motion for summary judgment reflects that the LLC had been registered in February 18, 2005, prior to the fire.
Finally, the defendant points to the fact that when his wife threatened him with divorce, Glatzel, albeit on the advice of counsel, conveyed his interest in the LLC to his father but continued to manage its affairs. When domestic tranquility was restored to the marriage, he had his father re-convey the company back to him.
The plaintiff admits that "Double G.G. is owned and controlled by Carl Glatzel, Jr." A document submitted by the plaintiff in opposition to the motion reflects that Glatzel is the only principal of the company. It is apparent that he maintained no company books but, rather, ran the affairs of this relatively passive real estate investment out of his pocket. That, alone, might not be sufficient to pierce the corporate veil. However, that he conveyed the company to Glatzel, Sr. (unbeknownst at the time to Glatzel, Sr.) for such purely personal reasons, continued to run its affairs, and then re-conveyed the company back to himself when circumstances suited him reflects a unity of interest and ownership between Glatzel and the company and a complete lack of independence of the latter. In such circumstances adherence to the fiction of a separate company identity would serve only to defeat justice and equity by permitting Glatzel to escape obligations assumed by the LLC pursuant to an insurance policy of which he, Glatzel, was the ultimate and lone beneficiary. Quite clearly, there was such a unity of interest and ownership between Glatzel and the plaintiff that the plaintiff never was an independent entity. Adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting Glatzel and the LLC to escape the "duties in the event of loss or damage" under the policy. Under the identity theory, the court pierces the plaintiff's company veil and holds that the "duties in the event of loss or damage" imposed under Part B of the insurance policy are imposed on Glatzel as well as the plaintiff insured.
This holding does not unfairly impose retrospective prejudice on the plaintiff since prior to the defendant's filing of the instant motion, Glatzel never denied that the defendant was entitled to his personal income tax returns. His position was that he had provided all the documents to the defendant that he could obtain.
III
The court finally addresses the merits of the defendant's claim that it is entitled to judgment because the plaintiff failed to comply with its obligations under the policy.
By letter dated April 19, 2006, the defendant's attorney wrote to the plaintiff's attorney and made demand that Glatzel and Glatzel, Sr. submit to examinations under oath on May 4, 2006, and that they bring with them the following documents, which were listed on an attachment to the letter entitled "Exhibit A":
1. All state and federal tax returns, whether individual, joint, several, corporate, partnership or business filed by you or on your behalf or on behalf of any entity or business which employed you or in which you own any ownership interest (excluding an ownership interest solely by reason of stock ownership in a corporation which is publicly traded on a recognized stock exchange) for the period which includes calendar years 2001 through the present.
2. All financial statements, books of account, general ledgers or other financial documents prepared or created by you or any other person or entity which pertain to your financial condition or that of any other corporation, partnership, entity or business which employed you or in which you own an ownership interest (excluding an ownership interest solely by reason of stock ownership in a corporation which is publicly traded on a recognized stock exchange) from January 1, 2001 through the present.
3. All documents, including loan agreements, payment books, statements of account, monthly statements or other similar materials which refer or relate to any mortgage, loan, credit card balance or other indebtedness owed by yourself or by any corporation, partnership, business or other entity which employed you or in which you own any ownership interest (excluding an ownership interest solely by reason of stock ownership in a corporation which is publicly traded on a recognized stock exchange) as of April 24, 2005.
4. All documents which relate or refer to Double G.G. Leasing, LLC.
5. All records, documents or other tangible items which refer or relate to any claim filed by or on behalf of you, or any corporation, partnership, business or other entity which employed you or in which you own any ownership interest (excluding an ownership interest solely by reason of stock ownership in a corporation which is publicly traded on a recognized stock exchange) with any insurance company from January 1, 2001 through the present.
6. All policies, premium statements, policy applications or other documents which refer or relate to any insurance policy issued to you or to any corporation, partnership, business or other entity which employed you or in which you own any ownership interest (excluding an ownership interest solely by reason of stock ownership in a corporation which is publicly traded on a recognized stock exchange) and insuring the premises known as 370 Danbury Road, New Milford, Connecticut 06776.
7. All receipts, documents or other tangible items which you contend document your whereabouts on April 24, 2005.
8. All records, documents or other tangible items in your possession or held by another on your behalf which refer or relate to the cause or origin of the fire at 370 Danbury Road, New Milford, Connecticut 06776 of April 24, 2005.
9. All records, lists or other documents which would contain the full names and/or last known addresses (at present) of each tenant or other occupant of any portion of the premises, the monthly rental charged to them and the balance of any sums owed at 370 Danbury Road, New Milford, Connecticut 06776 as of April 24, 2005.
10. Any and all records and documents or other tangible items, including invoices, receipts, estimates, expense summaries, proposals, checks, payments or similar items which refer or relate to any repairs, modifications or renovations of the structure located on 370 Danbury Road, New Milford, Connecticut 06776.
11. Any and all incorporation documents for Double G.G. Leasing, LLC.
12. Any and all documents which pertain or relate to the corporate structure, corporate governance and ownership of Double G.G. Leasing, LLC, including but not limited to operating agreements, articles of organization, bylaws, amendments, statements of ownership, shareholder agreements, from the date of incorporation through the present.
13. Any and all document [sic] which pertain or relate to the purchase of 370 Danbury Road, New Milford, Connecticut 06776.
On April 21, 2006, the plaintiff's attorney wrote to the defendant's attorney advising him that he would be away on vacation on May 4 and 5, 2006, and requesting that the examinations be rescheduled. The defendant's attorney rescheduled the examinations for July 26 and 27, 2007. The plaintiff's attorney again wrote to the defendant's attorney asking that the examinations be rescheduled because Glatzel, Sr. was ill and Glatzel had moved to South Carolina. The defendant's attorney suggested that the examinations be rescheduled for October 16 and 17, 2006. After the plaintiff's attorney responded that neither he nor the Glatzels were available on those dates, the defendant's attorney suggested November 16 and 17, 2006, and November 30, 2006 and December 1, 2006, as possible dates for the examinations. The parties agreed on December 7 and 8, 2006.
The defendant examined Glatzel under oath on December 7, 2006. Toward the conclusion of the deposition, the following exchange occurred between Glatzel, the defendant's counsel and the plaintiff's counsel.:
Q. [By Attorney Dugan, Defendant's attorney] That brings us exactly to the item two on Exhibit A, which reads that you were requested "to produce all financial statements, books of account, general ledgers or other financial documents prepared or created by you which pertain to your financial condition and that of any other corporation, partnership, entity or business which employed you or in which you own an ownership interest" —
A. [By Glatzel] I didn't read all that.
Q. — "from January, 2001 to the present."
A. I thought he meant G.G.
Q. No, that's — let me just clarify, it reads specifically, "which pertain to your financial condition or that of any other corporation, partnership, entity or business which employed you in which you own an ownership interest."
CT Page 8410
A. Well, I misunderstood it.
Q. Well, let me clarify that the request is directed to you, sir, as hundred-percent owner of G.G., president, stockholder, controlling person.
A. G.G. is easy. There's like a hundred dollars in the account. That thing hasn't done nothing.
Q. Right. So I'm speaking to you personally.
A. But I just come through that. That's why I should have read the whole damn thing, but I didn't.
Q. Right.
MR. CONTI [Plaintiff's attorney] We will provide you with —
THE WITNESS: Absolutely, I can provide that.
MR. DUGAN: The problem, and let me get —
MR. CONTI: I Know.
MR. DUGAN: Let me cut to the chase.
THE WITNESS: I wish you could.
MR. CONTI: Right
MR. DUGAN: Mr. Conti, I'm sure, understands that the record right now is not acceptable.
MR. CONTI: We understand. We'll provide you with additional information.
MR. DUGAN: And the opportunity to request the witness again?
MR. CONTI: Absolutely, we'll make ourselves available.
CT Page 8411
MR. DUGAN: I'm not trying to belabor anything.
MR. CONTI: I understand exactly what you're saying. We'll provide to you the information, and we've also indicated to you previously, as you know, that we're attempting to locate the closing documents, which will be provided to you as well.
On December 18, 2006, the defendant's attorneys wrote to the plaintiff's attorney stating that the defendant now required the plaintiff to produce the following additional documents.
A. All receipts, invoices, billings and other documents pertaining to work performed at the subject structure prior to of [sic] after the subject reported fire. We acknowledge that your client has previously provided some records relating to the subject matter, but wish to be certain that this production is complete.
B. A copy of the plot plan, survey and drawings obtained by or provided to your client concerning the use of the subject land parcel and the work created from January 1, 2003 to the current date.
C. Closing statements and other documents pertaining to the sale of Carl Glatzel, Jr.'s resident at 26 Nutmeg Lane near [sic] Milford, Connecticut and purchase of his North Carolina residence.
D. Records, documents, order, correspondence and memoranda pertaining to the eminent domain taking by the Department of Transportation relating to the subject land parcel.
E. A copy of the listing agreements, written offers, and/or purchase and sale agreements relating to the proposed sale of the subject property though William Raveis and/or Century 21.
F. Any documents, such as correspondence, proposals, offers, solicitations by any commercial entity such as Kentucky Fried Chicken, Starbucks, Dunkin Donuts and the like pertaining to the subject property as referred to at the insured's previous testimony.
G. Copies of any notices, demands, causes of action, correspondence and other writings pertaining to the foreclosure action commenced by the former owner, Jack Duda, upon the subject property for the period February 5, 2005 though the current date.
H. Copies of all estimates, proposals, reports and other writings that support the insured's claim for value of the damaged building.
I. A copy of documents that summarize or record all billings and income received by C.T.G. Construction, pertaining to any job, client, project, work or other task perform [sic] by or on behalf of C.T.G. Construction in calendar year 2005.
In response to these pre-suit requests for documents, the plaintiff provided the defendant with a copy of the following: the mortgage deed and security agreement for the subject property; correspondence from the New Milford town attorney and fire marshal regarding the fire investigation; two changes of statutory agent for the plaintiff filed with the secretary of state; two interim notices of Change of Member/Manager for the plaintiff filed with the secretary of state; an assignment of membership interest of the plaintiff; a letter from the secretary of state, dated December 3, 2006, and "Acceptance of Business Filing," for the plaintiff; a Business Information Verification Report; various correspondence from Eastland Claim Service, Inc., defendant's fire investigators, one enclosing a copy of preliminary statement of the actual cash value of items claimed lost in the fire; invoice from Twin Eagles Construction, LLC; a bill from Plimpton Hills, dated January 6, 2005, for materials sold to a Jeff Schmidt; a list of items entitled "Jeff Schmidt"; a bill from Cherry Hill Construction to Twin Eagles Construction; a bill from Cherry Hill Construction for demolition of the house and site clean up; various correspondence from the Bozelko law firm; a Consent to Search Examination of Evidence, signed by Glatzel for the Connecticut department of public safety; correspondence from the Bozelko law firm to Richard Palmieri of Eastland Claim Service, Inc., enclosing (1) documents concerning the purchase of 366 Danbury Road, New Milford, Ct. by the plaintiff, (2) documents concerning the creation of the plaintiff, and (3) a list of improvements made to the property since the plaintiff's purchase; an appraisal of replacement cost of the property; a completed questionnaire and diagrams provided to United Cleaning regarding certain items destroyed in the fire; a warranty deed and real estate conveyance tax return; a bill from an attorney for the preparation of closing documents; a sheath of documents entitled "Results of Your Mortgage Calculation"; articles of organization of plaintiff; promissory notes; a tax bill to John Duda for 370 Danbury Road, New Milford, CT; a boundary survey of the subject property prepared for the plaintiff; an agreement between Malgorzaa Kobialka and Carl Glatzel, trustee of the Carl T. Glatzel, Jr. Irrevocable Trust, dated April 10, 2005, for the sale and purchase of 26 Nutmeg Drive, New Milford, Ct.; a copy of a foreclosure, the lawsuit and a lis pendens filed by John Duda and the John Duda Living Trust against the plaintiff and Glatzel as to the subject property; a closing statement for the plaintiff's sale of the subject property on June 26, 2006; and a survey of the subject property. On April 16, 2007, the plaintiff commenced this action.
The defendant argues that "the plaintiff has failed and/or refused to produce the following documents: (1) Federal and State Tax Returns filed by Carl Glatzel, Jr. and Double G.G. Leasing, LLC; (2) the insured's financial statements, books of account and other records pertaining to the insured's financial condition; (3) loan agreements, statements of account, monthly statements pertaining to mortgages, loans and other indebtedness owed by Carl Glatzel, Jr. or Double G.G. Leasing, LLC; (4) records pertaining to previous insurance claims; (5) documentation of the insured's whereabouts on the night of the fire; (6) identification of the last tenant or other occupant at this structure prior to the fire; (7) documentation pertaining to any repairs, modifications or renovations of the structure; (8) records pertaining to the Eminent Domain taking by the Department of Transportation relating to the subject land parcel; (9) the listing agreement, written offers or purchase and sale agreement relating to the sale of the subject property; (10) documents pertaining to solicitations by commercial entities, such as Kentucky Fried Chicken, Starbucks, Dunkin Donuts pertaining to the subject property; (11) estimates, proposals and other writings pertaining to the insured's claim for value of the damaged [sic]; and (12) documents pertaining to billings and income of C.T.G. Construction."
The plaintiff argues that it attempted in good faith to schedule the examinations under oath at times that were convenient not only to Glatzel but to the respective lawyers, but that this proved difficult; that many of the documents demanded by the defendant were not material, that it substantially complied with the defendant's demand for documents and provided all the documents he had. In an affidavit in opposition to the defendant's summary judgment motion, Glatzel states that he has provided all the materials requested that are in his possession or that he could obtain. The plaintiff argues that "[j]ust because the defendant has requested something does not mean that the requested document exists, or can be obtained in the exercise of due diligence." Finally, the plaintiff observes that it informed the defendant by letter, both before and after the commencement of this action, that Glatzel was prepared to sit for another examination under oath and that the instant action was commenced when it was because of contractual limitations concerns.
Memorandum of Law In Opposition to Defendant's Motion for Summary Judgment, October 26, 2007, p. 10.
"[A]bsent estoppel, waiver or other excuse, the substantial or material breach of the cooperation provisions of the insurance policy by an insured puts an end to the insurer's obligation." (Internal quotation marks omitted.) Taricani v. Nationwide Mutual Ins. Co., 77 Conn.App. 139, 145, 822 A.2d 341 (2003). Information is material if it "concerns a subject relevant and germane to the insurer's investigation as it was then proceeding." Bauco v. Hartford Fire Ins. Co., Superior Court, judicial district of Fairfield, Docket No. 0375290 (March 3, 2004) (36 Conn. L. Rptr. 799, 803-04), quoting Fine v. Bellafonte Underwriters Ins. Co., 725 F.2d 179, 183 (2d Cir. 1984), cert. denied, 469 U.S. 874, 105 S.Ct. 233, 83 L.Ed.2d 162 (1984).
A
Although the defendant makes much of a statement made by plaintiff's counsel at Glatzel's examination that "the record right now is unacceptable" and plaintiff's counsel's agreement to provide additional information, the defendant does not claim that these remarks rise to the level of an admission or estoppel.
The court addresses the categories of items listed supra that the defendant claims the plaintiff failed to produce.
(1) With respect to the insured's financial statements, books of account and other records pertaining to the insured's financial condition, there was one item of property owned by the plaintiff, and the plaintiff has provided documents relating to the expenses incurred in connection with that property and the proceeds of the sale.
(2) With respect to loan agreements, statements of account, monthly statements pertaining to mortgages, loans and other indebtedness, the plaintiff has provided the requested documents.
(3) With respect to records pertaining to previous insurance claims, there do not appear to have been any such claims.
(4) With respect to documentation of the insured's whereabouts on the night of the fire, obviously, this would pertain only to Glatzel individually and not to the plaintiff.
(5) With respect to identification of the last tenant or other occupant at this structure prior to the fire, Glatzel testified as to this matter in his examination.
(6) With respect to documentation pertaining to any repairs, modifications or renovations of the structure, the plaintiff complied with this item.
(7) With respect to records pertaining to the eminent domain taking by the Department of Transportation relating to the subject land parcel, the only evidence is that the taking occurred prior to the plaintiff's purchase of the property. Therefore, the plaintiff cannot be faulted for not producing these records.
(8) With respect to the listing agreement, written offers or purchase and sale agreement relating to the sale of the subject property, the closing statement reflects that there was no broker at the time of the sale. While Glatzel's testimony reflects that a broker had been involved earlier in the marketing of the property, and therefore that a listing agreement probably existed, the defendant has not persuaded the court that there is no genuine issue of material fact as to the materiality of these documents.
(9) With respect to documents pertaining to solicitations by commercial entities, such as Kentucky Fried Chicken, Starbucks, Dunkin Donuts pertaining to the subject property, the defendant has not persuaded the court that any such solicitations were in writing and that such documents existed.
(10) With respect to estimates, proposals and other writings pertaining to the insured's claim for value of the damaged property, the plaintiff has complied with this item.
(11) With respect to documents pertaining to billings and income of C.T.G. Corporation, the defendant has not persuaded the court that there is no genuine issue of material fact as to the materiality of these documents.
B
Glatzel, however, did not produce his individual federal or state income tax returns as requested. He argues first that the defendant has failed to demonstrate that these were material.
The plaintiff does not argue that income tax returns are not within the ambit of records that the defendant may demand pursuant to the "Duties in the Even Of Loss Or Damage" provision of Part E of the insurance policy.
"Arson is a difficult crime to prove. It can only be established by circumstantial evidence and by inquiries into motive. Financial records of the insured are, as the cases say, `patently' relevant to the insurance company's rightful scope of investigation." Bergen v. Standard Fire Ins. Co., Superior Court, judicial district of Ansonia-Milford, Docket No. CV 93 044099S (December 31, 1997, Corradino, J.) (20 Conn. L. Rptr. 154, 159)]. "For example, `[r]equests for income records are certainly material inquiries . . .' The production of documents material to the rightful request of the insurer investigating an incendiary fire would then appear to be a condition precedent to recovery under a fire insurance policy. [ Bergen v. Standard Fire Ins. Co., supra, 20 Conn. L. Rptr. 160]. Courts have found a material breach by the insured in failing to produce documents without explanation or excuse. Id." McCarthy v. Travelers Indemnity, Superior Court, judicial district of Fairfield, Docket No. CV 970345443 (March 29, 2000, Melville, J.); see 2423 Mermaid Realty Corp. v. New York Property Ins. Underwriting Ass'n., supra, 142 A.D.2d 131 ("In view of the fact that direct proof of arson is seldom available, courts have recognized that the requisite degree of proof can be satisfied in civil cases by circumstantial evidence . . . Information gleaned from the tax returns of an individual insured or the officers of a corporate insured can be of crucial significance in that regard" (citation omitted)); DiFrancisco v. Chubb Ins. Co., 283 N.J.Super. 601, 612, 662 A.2d 1027 (1995); Powell v. United States Fidelity Guaranty Co., 855 F.Sup. 858, 860 (E.D.Va. 1994), aff'd, 88 F.3d 271 (4th Cir. 1996), and cases cited therein. In light of the circumstances surrounding the fire loss, the temporal proximity of the plaintiff's highly leveraged purchase of the property to the fire loss, the incendiary nature of the fire, the apparent absence of any regular source of income enjoyed by Glatzel, Glatzel's personal income tax returns were highly material.
The plaintiff also argues that it has complied with the defendant's demand for documents as best it could.
In his examination under oath, Glatzel admitted that he filed tax returns.
A. [By Glatzel] I didn't file, my accountant takes care of all the paperwork. I go out and do the jobs. When it comes to paperwork, I'm lost.
Q. [By Attorney Dugan] You signed tax returns?
A. Oh, yeah.
Q. You have filed taxes?
A. Yes. To the best of my knowledge — I'll call him and have him send the stuff to you . . .
Glatzel, however, did not produce his tax returns.
In opposition to the defendant's motion, Glatzel has filed an affidavit in which he states: "I have provided [the defendant's attorneys], via my attorneys, with all documents in my possession, or that I was able to obtain in the exercise of due diligence, that correspond with the requests [for documents]."
A similar affidavit was filed by the plaintiff in McCarthy v. Travelers Indemnity Co., supra. McCarthy also was action on an insurance policy to recover for a fire loss in which the insurer's moved for summary judgment. The insurer argued that after the loss, the plaintiff had failed to produce certain requested records, thereby breaching a cooperation provision in the policy. In McCarthy, the plaintiff filed an affidavit stating: "The majority of my financial and business records were destroyed in the fire and I have been attempting to reconstruct them. Those documents and information I have been able to obtain have been forwarded to the Travelers Indemnity Company . . . [o]nce I am in possession of the necessary information. I will immediately submit a sworn, accurate proof of loss." Id. The court held that the affidavit was insufficient, as "it is conspicuously devoid of evidentiary matter specifically contesting the considerable factual proof offered by the defendant. It is well established that `[i]n order to successfully oppose a motion for summary judgment, the opposing party must recite facts . . . which contradict those offered by the moving party . . .' Citizens National Bank v. Hubney, [ 182 Conn. 310, 312, 438 A.2d 430 (1980)]. Moreover, `[a]n adverse party, by affidavit or as otherwise provided by [Practice Book § 17-45], must set forth specific facts showing that there is a genuine issue for trial, and if he does not so respond, summary judgment shall be entered against him.' . . . Connecticut Housing Finance Authority v. John Fitch Court Associates Ltd. Partnership, 49 Conn.App. 142, 148-49, 713 A.2d 900, cert. denied, 247 Conn. 908, 719 A.2d 901 (1998)." (Emphasis in original.) McCarthy v. Travelers Indemnity Co., supra, Superior Court, Docket No. CV 97 0345443. The court finds Glatzel's affidavit similarly deficient.
In an affidavit, the plaintiff's attorney states: "My client, Double G.G. Leasing, Inc., via its owner, Carl Glatzel, Jr., remains willing to cooperate with the Underwriters' investigation, including attending an additional examination under oath." Glatzel has never produced his tax returns. He does not even represent that he will do so now. The defendant is entitled to assert this breach in defense to this action.
At oral argument, the plaintiff's attorney represented that the requested tax returns do not exist, and that there is a pending investigation regarding tax matters. It is axiomatic that an attorney's argument is not evidence. State v. Santangelo, 205 Conn. 578, 585, 534 A.2d 1175 (1987). Glatzel's sworn testimony at his examination under oath that such tax returns were filed remains uncontradicted.
The court recognizes that an insured's noncompliance with an insurance policy's cooperation provision is excusable if the insured can demonstrate that the insurer was not prejudiced. Taricani v. Nationwide Mutual Ins. Co., supra, 77 Conn.App. 148-50. Here, as in Taricani, which also was a fire loss case in which the insured breached a cooperation provision, the plaintiff has made no such showing.
Finally, the plaintiff argues that the defendant's motion should be denied because its failure to produce the requested documents was not wilful. In light of Glatzel's testimony at his examination under oath that income tax returns were filed, and in the absence of any explanation, it is difficult to conceive how such a breach is not wilful.
The court briefly addresses the second count of the amended complaint. Since the defendant was entitled to assert that the plaintiff breached the policy's cooperation provision in defense to the plaintiff's claim on the policy, the defendant did not breach the implied covenant of good faith and fair dealing. McCarthy v. Travelers Indemnity Co., supra, Superior Court, Docket No. CV 970345443.
The defendant's motion for summary judgment is granted.