Opinion
No. CV01-0075027S
December 12, 2003
MEMORANDUM OF DECISION
Before the court is the defendant Barth Insurance Agency, Inc.'s motion to strike the second and third counts of the plaintiff's complaint. The plaintiff, Mahmooda Hotak, brought this action against Barth and co-defendant Infinity Insurance Company, an insurance carrier, alleging that because the Barth agency negligently prepared plaintiff's insurance application, upon plaintiff's later submission of an auto insurance claim, Infinity rescinded the policy for failure to provide full and accurate information in the application.
Plaintiff filed an eleven-count complaint against Barth (defendant) and Infinity. Counts one, two (Connecticut Unfair Insurance Practices Act [CUIPA]) and three (Connecticut Unfair Trade Practices Act [CUTPA]) are brought against the defendant. (Counts four through eleven are brought against Infinity.) Plaintiff alleges that on January 6, 2000, the agency prepared an insurance application for a 1999 Mitsubishi, and in response, Infinity issued a policy. While the policy was in effect, plaintiff gave a notice of claim to defendant and Infinity regarding an accident, and as a result, Infinity rescinded the policy for a failure to list information about household residents and drivers in the application. Plaintiff alleges that although she provided full and responsive answers, the agency failed to include all of the disclosed information in the application, and thus, was negligent in preparing it.
Because Barth Insurance Agency, Inc. is the only defendant to file a motion to strike, any reference herein to the defendant is solely to it.
Defendant agency has moved to strike counts two and three on the ground that they fail to state a claim upon which relief can be granted.
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); See Practice Book § 10-39. "A motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court." (Internal quotation marks omitted.) Salemme v. Seymour, 262 Conn. 787, 792, 817 A.2d 636 (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.) Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378, 698 A.2d 859 (1997). "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). "Moreover . . . [w]hat is necessarily implied [in an allegation] need not be expressly alleged . . ." (Citation omitted; internal quotation marks omitted.) Lombard v. Edward J. Peters, Jr., P.C., 252 Conn. 623, 626, 749 A.2d 630 (2000). "[I]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Internal quotation marks omitted.) Bhinder v. Sun Co., 263 Conn. 358, 366, 819 A.2d 822 (2003). "A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, supra, 262 Conn. 498.
A Count Two: CUIPA
Count two, which alleges it was negligent in preparing the application, and that this constitutes an unfair insurance practice under CUIPA, General Statutes § 38a-815 et seq. Defendant argues the count does not state a claim because CUIPA does not provide for a private cause of action, and that claims under CUIPA are to be brought by the Insurance Commission of the State of Connecticut. Further, that if this court were to allow a private cause of action under CUIPA, count two should still be stricken because a single incident of negligence does not constitute an unfair insurance practice under CUIPA.
The basis for defendant's alternative argument is that General Statutes § 38a-816(6) provides: "[c]ommitting or performing with such frequency as to indicate a general business practice . . . (a) [m]isrepresenting pertinent facts or insurance policy provisions relating to coverages at issue . . ." The defendant argues that the plaintiff has failed to established a legally sufficient claim because the plaintiff alleges a single act of insurance misconduct, which does not satisfy General Statutes § 38a-816(6) language of "frequency as to indicate a general business practice." (Emphasis added.)
The question of whether a private cause of action exists under CUIPA has consistently been reserved by our Supreme Court. See Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 645 n. 14, 804 A.2d 180 (2002); Napoletano v. Cigna Healthcare of Connecticut Inc., 238 Conn. 216, 221 n. 5, 680 A.2d 127, cert. denied, 520 U.S. 1103, 117 S.Ct. 1106, 137 L.Ed.2d 308 (1996); Lees v. Middlesex Ins. Co., 229 Conn. 842, 847 n. 4, 643 A.2d 1282 (1994); Mead v. Burns, 199 Conn. 651, 657 n. 5, 509 A.2d 11 (1986); Griswold v. Union Labor Life Ins. Co., 186 Conn. 507, 521 n. 12, 442 A.2d 920 (1982). Superior Courts are split as to whether such a private right of action exists under the statute.
Cases refusing to recognize a private right of action under CUIPA include: American Progressive Health Ins. Com. of New York v. Better Benefits, Superior Court, judicial district of New Haven, Docket No. 471359 (September 10, 2003, Blue, J.) ( 35 Conn. L. Rptr. 435); Walsh v. Allstate Ins. Co., Superior Court, judicial district of Tolland at Rockville, Docket No. 080039 (May 9, 2003, Scholl, J.); Liquore v. Assurance Co. of America, Superior Court, Complex litigation docket at Norwich, Docket No. X04 CV 01 0124151 (March 19, 2002, McLachlan, J.); Stevens v. Allstate Ins. Co., Superior Court, judicial district of Ansonia-Milford at Milford, Docket No. 071957 (January 24, 2002, Sequino, J.); Conway v. Travelers Casualty, Superior Court, judicial district of Hartford, Docket No. 0588119 (December 15, 2000, Rubinow, J.); Lee v. Scottsdale Insurance Co., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 350438 (February 8, 1999, Nadeau, J.); Gold v. American Economy Insurance, Superior Court, judicial district of New Haven, Docket No. 380475 (June 23, 1998, Moran, J.) ( 22 Conn. L. Rptr. 349); Martin v. Marino, Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 566135 (April 9, 1997, Aurigemma, J.); Joseph v. Hannan Agency, Inc., Superior Court, judicial district of Danbury, Docket No. 323310 (January 9, 1997, Moraghan, J.) ( 18 Conn. L. Rptr. 552); Allessa v. Allstate Ins. Co., Superior Court, judicial district of Ansonia-Milford at Milford, Docket No. 050550 (November 7, 1995, Skolnick, J.) ( 16 Conn. L. Rptr. 317).
Cases recognizing a private right of action under CUIPA include: Cirrito v. Crawford Co., Superior Court, judicial district of New Haven, Docket No. 456052 (December 23, 2002, Zoarski, J.T.R.); George's Auto Parts, Inc. v. Providence Washington Ins. Co., Superior Court, judicial district of New Haven, Docket No. 439407 (February 8, 2001, Munro, J.); Sygiel v. Clifford, Ban Loos, Insurance Agency, Inc., Superior Court, judicial district of New Haven, Docket No. 360149 (July 27, 1995, Licari, J.) ( 14 Conn. L. Rptr. 561); Edelman v. Pacific Employers Insurance Co., Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 0533463 (October 21, 1994, Hennessey, J.); Agency Rent A Car v. ITT Hartford, Superior Court, judicial district of Hartford, Docket No. 530573 (Sept. 26, 1994, Corradino, J.); Covino v. Jacovino, Superior Court, judicial district of Waterbury, Docket No. 107889 (July 20, 1993, Sullivan, J.) ( 9 Conn. L. Rptr. 377).
The Superior Court majority holds, for example, that "[t]here is no express authority under CUIPA for a private cause of action . . . CUIPA is not ambiguous; by its express terms, CUIPA is a regulatory act, authorizing the insurance commissioner to investigate alleged unfair insurance practices." (Internal quotation marks omitted.) Walsh v. Allstate Insurance Co., Superior Court, judicial district of Tolland at Rockville, Docket No. 080039 (May 9, 2003, Scholl, J.). However, a private party who alleges a CUIPA violation is not precluded from the courtroom. The Supreme Court has held that "a private cause of action exists under CUTPA to enforce alleged CUIPA violations." Lees v. Middlesex Ins. Co., 219 Conn. 644, 654, 594 A.2d 952 (1991), citing Mead v. Burns, supra, 199 Conn. 665-66. "In light of the existing remedy to redress a CUIPA violation, and the unlikelihood that the legislature intended two statutory causes of action to redress the same conduct, there is no private cause of action under CUIPA." (Internal quotation marks omitted.) Lee v. Scottsdale Insurance Co., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. 350438 (February 8, 1999, Nadeau, J.).
This court has previously joined the majority's camp, and feels compelled to stay therein. See Id. As a result, defendant's motion to strike count two is granted on the ground that CUIPA does not allow for a private cause of action. As a result, the court need not reach defendant's alternative argument as to whether a single incident of negligence suffices under CUIPA.
B Count Three: CUTPA
In count three plaintiff alleges that the agency's negligence in filling out the application violated CUTPA, General Statutes § 42-110b. Additionally, plaintiff alleges that defendant has previously engaged in such conduct. The defendant again contends that this count too should be stricken for failure to state a claim. In particular, defendant argues that plaintiff claims defendant engaged in professional negligence, which is exempt from CUTPA through the professional negligence exception. In response, plaintiff argues that the CUTPA claim is premised on the defendant's alleged violation of CUTPA and not professional negligence. Alternatively, defendant again argues that if CUTPA is found to apply in this case, count three should still be stricken because a single act of negligence does not constitute a violation of CUTPA.
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."
As to the defendant's argument that its conduct constitutes professional negligence and is thus exempt from CUTPA, the Supreme Court has explicitly extended this exemption only to the professions of law and medicine. See Haynes v. Yale-New Haven Hospital, 243 Conn. 17, 34, 699 A.2d 964 (1997) (exempting the medical profession); Beverly Hills Concepts, Inc., v. Schatz Schatz, Ribicoff Kotkin, 247 Conn. 48, 79, 717 A.2d 724 (1998) (exempting the practice of law). The professional negligence exemption only allows the entrepreneurial or commercial aspects of the medical and law professions to be subject to a CUTPA claim. See Haynes v. Yale-New Haven Hospital, supra, 243 Conn. 34; Beverly Hills Concepts, Inc., v. Schatz Schatz, Ribicoff Kotkin, supra, 247 Conn. 79. Public policy reasons were articulated as to why CUTPA claims brought against these groups of professionals are limited solely to the entrepreneurial or commercial aspects of those professions. See Haynes v. Yale-New Haven Hospital, supra, 243 Conn. 34-38. However, there is a split among the trial courts as to whether the professional negligence exception should be extended to other professions.
Only the entrepreneurial or commercial aspects bf the profession of law are subject to CUTPA because "it is important not to interfere with the attorneys primary duty of robust representation of the interests of his or her client . . . The non commercial aspects of lawyering . . . should be excluded for public policy reasons." Haynes v. Yale-New Haven Hospital, 243 Conn. 35. The entrepreneurial or commercial medical profession are exempt from CUTPA because there is a crucial difference between the actual practice of medicine and the non-business aspects of medicine. Id., 37. To allow "[m]edical malpractice claims recast as CUTPA claims . . . would transform every claim for medical malpractice into a CUTPA claim." Id., 38.
The Supreme Court has not yet limited the application of CUTPA as to other professionals, such as insurance agents. This Superior Court has previously "[declined] to make a groundless expansion of the Supreme Court's rule in Haynes to other professional groups." Darien Asphalt Paving v. Newtown, Superior Court, judicial district of New Britain, Docket No. CV 98 048 78 (December 7, 1998, Nadeau, J.) ( 23 Conn. L. Rptr. 495) (see footnote 5). The court holds that the professional negligence exception to CUTPA does not apply to insurance professionals.
"The purpose of CUTPA is to protect the public from unfair practices in the conduct of any trade or commerce . . ." Willow Springs Condo. Assn., Inc. v. Seventh BRT Development Corp., 245 Conn. 1, 42, 717 A.2d 77 (1998). The defendant argues that to allow the CUTPA claim would circumvent the purpose of CUTPA because an alternative avenue to bring a rather ordinary malpractice action would be established when such cannot be prosecuted against doctors and lawyers. However, the Supreme Court has held that a party who has alleged unfair insurance practices, as defined in CUIPA, creates the basis for a cause of action under CUTPA. Engelman v. Connecticut General Life Ins. Co., 240 Conn. 287, 299, 690 A.2d 882 (1997); see also Mead v. Burns, 199 Conn. 651, 663, 509 A.2d 11 (1986). In the context of insurance, the purpose of CUTPA is advanced where there exists a valid CUIPA claim.
Count three makes no reference to a violation of CUIPA, but rather it alleges a violation of CUTPA by referring to General Statutes § 42-110b. Within count two lies a reference to CUIPA, but nothing of count two is incorporated into count three. It is in the plaintiff's objection to the motion to strike where he states that the basis for the CUTPA claim lies in the defendant's alleged violation of CUIPA. The plaintiff specifically refers to General Statutes § 38a-816(8) as the CUIPA violation. See Plaintiff's Memorandum of Law in Objection to Motion to Strike dated July 10, 2003 at 2-3. Viewing the complaint in the light most favorable to sustaining its legal sufficiency, Dodd v. Middlesex Mutual Assurance Co., supra, 242 Conn. 378, and implying the allegation not expressly alleged, Lombard v. Edward J. Peters, Jr., P.C., supra, 252 Conn. 626, the court finds that the plaintiff has pled a CUTPA claim based on a "section 8" CUIPA violation, General Statutes § 38a-816(8). Thus, the question becomes whether plaintiff has alleged a valid "section 8" CUIPA claim.
General Statutes § 38a-816(8) provides: "Misrepresentation 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."
Neither the Supreme nor Appellate Court has analyzed General Statutes § 38a-816(8) (see footnote 6), but the trial courts have addressed it. See Lefebvre v. Tracy Driscoll Co., Superior Court, judicial district of New Britain, Docket No. 517796 (May 6, 2003, Cohn, J.), and cases cited therein. In Lefebvre, the plaintiff alleged that the defendant negligently prepared and submitted an insurance application for fire coverage. The plaintiff alleged a violation of CUIPA under General Statutes § 38a-816(8), which became the basis for the alleged CUTPA claim under General Statutes § 42-110b. Id. The court, in analyzing General Statutes § 38a-816(8), looked to the Supreme Court's analysis of General Statutes 38a-816(1)(f), which contains similar language. See id. (citing Heyman Associates No. 1 v. Insurance Co. of Pennsylvania, 231 Conn. 756, 790, 653 A.2d 122 (1995)). The Lefebvre court held that a motion to strike a CUTPA claim based on General Statutes § 38a-816(8) will be denied where "the plaintiffs plead that the misrepresentations were intentional . . .," Lefebvre v. Tracy Driscoll Co., supra, Superior Court, Docket No. CV 02 0517796, and further stated that "the plaintiffs are not claiming that the representations were made in a careless or even sloppy manner or that inaccurate information was involved. Instead, the plaintiffs plead that the misrepresentations were intentional . . ." Id.
General Statutes § 38a-816(1) provides in relevant part: "Misrepresentations and false advertising of insurance policies. Making, issuing or circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement, sales presentation, omission or comparison which: . . . (f) is a misrepresentation for the purpose of inducing or tending to induce to the lapse, forfeiture, exchange, conversion or surrender of any insurance policy . . ."
This court is persuaded by the Lefebvre court's analysis of General Statutes § 38a-816(8), requiring an allegation of intentional conduct. The plain language of General Statutes § 38a-816(8) states: "[m]aking false or fraudulent statements or representations . . . for the purpose of obtaining . . ." This language seems to permit recovery only if a purposeful misrepresentation is established, and therefore, requires an allegation that the insurer acted intentionally. See Wadia Enterprises, Inc. v. Hirschfeld, 224 Conn. 240, 248-49, 618 A.2d 506 (1992). In order for plaintiff to survive defendant's motion to strike, this court feels that a valid CUIPA claim pursuant to General Statutes § 38a-816(8) must include an allegation of an intentional act by defendant.
In Waida, supra, the Supreme Court stated that in order to establish a dishonest purpose, there must be an allegation or prooof an intentional act. An honest mistake or mere negligence does not constitute a dishonest purpose. Id., 248-49.
Here, paragraph nine of count three states that defendant negligently failed to prepare, provide and make corrections to the application. Plaintiff does not allege the defendant acted intentionally, but rather, that defendant was negligent by breaching its duty to exercise reasonable care, skill and diligence. The plaintiff's failure to plead an intentional act on behalf of the defendant prevents this court from finding that a legally sufficient CUIPA claim pursuant to General Statutes § 38a-816(8) via CUTPA has been pleaded. Defendant's motion to strike count three of plaintiff's revised complaint must be granted.
In the interest of thoroughness, the court will address the defendant's alternative argument that a single act of negligence does not constitute a violation of CUTPA. The Supreme Court has distinguished subsection (6) from the other subsections of § CT Page 14288 38a-816 by stating "that of the sixteen categories of unfair insurance practices proscribed by General Statutes § 38a-816, only subsection (6) expressly requires proof that the unfair claim settlement practices enumerated therein were committed or performed with such frequency as to indicate a general business practice." (Internal quotation marks omitted.) Lees v. Middlesex Ins. Co., supra, 229 Conn. 848 n. 5. This court is of the opinion that the plaintiff does not need to allege multiple unfair insurance practices to establish a violation of § 38a-816(8). A single unfair insurance practice may constitute a CUIPA violation per § 38a-816(8), and this violation can become the basis for a valid CUTPA claim. Plaintiff's count three should not fail, therefore, on the ground that a single act of negligence cannot constitute a violation of CUTPA.
For the foregoing reasons, however, the court holds that the defendant's motion to strike counts two and three is granted.
NADEAU, JUDGE.