Opinion
No. X06 CV 01 0170962 S
July 7, 2003
MEMORANDUM OF DECISION ON DEFENDANTS' MOTION TO STRIKE THE COMPLAINT (#128)
This case arises from an accident that occurred when an employee (Harris) of the plaintiff James Levin (Levin), an independent truck driver, was injured while assisting Levin. In effect at the time of the accident was an insurance policy issued and administered by the defendants Fireman's Fund Insurance Company, National Surety Corporation, American Automobile Insurance Company, Preferred Administrative Services, Inc., and VCW, Inc. (generally referred to collectively as "the insurance defendants"), pursuant to a program with the National Association of Independent Truckers (NAIT), of which Levin was a member.
Some time in early 1988, the insurance defendants made representations that purchase of their insurance products would prevent independent truck drivers such as Levin, as well as his general contractor/interstate motor carrier Paul Arpin Van Lines (Paul Arpin), from being sued in third-party actions for work-related injuries. In reliance on those representations, Levin purchased insurance products pursuant to the defendant insurer's NAIT program, with effective dates of coverage from February 6, 1988, through February 6, 1999. Harris' accident at work occurred on November 12, 1998.
That accident was reported to the insurance defendants on November 19, 1998, and, without ever obtaining a voluntary agreement or a signed election of remedies as required by General Statutes § 31-296, the insurance defendants commenced payment of workers' compensation benefits to Harris, for a total payment of $85,000, including medical benefits. Harris claims in sworn testimony that he never made a claim for workers' compensation benefits.
Harris filed a complaint in the superior court in May 1999, claiming in pertinent part that Levin's negligence and carelessness caused his injuries and damages. In the amended complaint filed in October 2000, Harris sued Levin's general contractor, Paul Arpin, asserting that Paul Arpin should be held vicariously liable for Levin's negligent acts. Paul Arpin then filed a third-party complaint against the insurance defendants and others on the stated premise that if the insurance defendants had properly performed their administrative duties, then Paul Arpin would have been protected from this litigation. Under their contract, Levin has a duty to indemnify Paul Arpin for liability, damage, loss and attorneys fees incurred as a result of the Harris action.
See Harris v. Levin, Superior Court Complex Litigation Docket, X06 CV 99 0170961 S.
The complaint in issue is pleaded in six counts: negligence (count one); breach of contract (count two); breach of duty of good faith and fair dealing (count three); breach of fiduciary duties (count four); violation of the Connecticut Unfair Insurance Practices Act (CUIPA) and the Connecticut Unfair Trade Practices Act (CUTPA) (count 5); and violation of CUTPA (count six). The insurance defendants have moved to strike all six counts. Levin has opposed the motion to strike.
The insurance defendants cannot claim the affirmative defense of exclusive remedy because Harris maintains that he never filed a claim for workers' compensation benefits.
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of the complaint . . . to state a claim upon which relief can be granted . . ." (Citations omitted; internal quotation marks omitted.) Peter-Michael, Inc. v. Sea Shell Associates, 244 Conn. 269, 270, 709 A.2d 558 (1998). "A motion to strike admits all facts well pleaded." Parsons v. United Technology Corp., 243 Conn. 66, 68, 700 A.2d 655 (1997). "In deciding upon a motion to strike . . . a trial court must take the facts to be those alleged in the complaint . . . and cannot be aided by the assumption of any facts not therein alleged." (Citations omitted; internal quotation marks omitted.) Liljedahl Brothers, Inc. v. Grigsby, 215 Conn. 345, 348 576 A.2d 148 (1990). "[A motion to strike] does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings . . ." (Citations omitted; emphasis omitted.) Mingachos v. CBS, Inc., 196 Conn. 91, 108, 491 A.2d 368 (1985). "The court must construe the facts in the complaint most favorably to the plaintiff." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). "Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied . . ." (Citation omitted; internal quotation marks omitted.) Gazo v. Stamford, 255 Conn. 245, 260, 765 A.2d 245 (2001). "A motion to strike is properly granted if the complaint alleges mere conclusions of law that are unsupported by the facts alleged." (Citations omitted.) Novametrix Medical Systems v. BOC Group, Inc., 224 Conn. 210, 215, 618 A.2d 25 (1992).
The insurance defendants have moved to strike the negligence claim (count one) on the basis that the allegations of the complaint fail to support a claim upon which relief can be granted because they fail to demonstrate that the defendants caused the alleged damages. The court disagrees. In Scribner v. O'Brien, Inc., 169 Conn. 389, 400, 363 A.2d 160 (1975), the court held that "[a] party may be liable in negligence for the breach of a duty which arises out of a contractual relationship." Id. The court must accept as true the facts alleged in the complaint. Levin alleges that he purchased insurance products and their administration from the insurance defendants, and as a result of their negligent administration, he has been harmed. The motion to strike count one is denied.
With respect to their motion to strike the contract claim (count two), the insurance defendants argue that Levin has failed to allege facts demonstrating that the alleged damages were a foreseeable result of the alleged breach. Again, accepting as true the facts as alleged in the complaint, the court finds that there was a contract to provide insurance and its administration which allegedly was breached when an employee was injured at work, received $85,000 in workers' compensation benefits without signing a statutory form, thereby depriving Levin of a defense to a third-party lawsuit by that employee. These allegations among others in the complaint demonstrate the insurance defendants' breach of duty to implement and administer appropriate claims procedures within the Connecticut workers' compensation context, which alleged breach has harmed Levin. The motion to strike count two is denied.
The defendant insurers seek to strike Levin's claim for breach of the duty of good faith and fair dealing (count three) on the basis that Levin fails to allege that they acted in a wanton and malicious manner with evil motive.
The requirements of pleading a breach of the duty of good faith and fair dealing are well established. "Every contract carries an implied covenant of good faith and fair dealing requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement. Bad faith means more than mere negligence; it involves a dishonest purpose." (Internal quotation marks omitted.) Gutpa v. New Britain General Hospital, 239 Conn. 574, 589, 687 A.2d 111 (1996) "Bad faith is not simply bad judgment or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity . . . it contemplates a state of mind affirmatively operating with furtive design or ill will." (Internal quotation marks omitted.) Buckman v. Peoples Express, Inc., 205 Conn. 166, 171, 530 A.2d 596 (1987).
While the insurance defendants are alleged to have deprived Levin of an exclusive remedy defense and thereby subject him to litigation by Harris in a third-party claim (see footnote 2, supra), the court's review of the complaint discerns no allegation that this result and the damages that ensued are the consequence of anything more than negligent administration of Levin's workers' compensation policy. Accordingly, the motion to strike count three is granted.
With respect to their motion to strike count four, which claims a breach of fiduciary duty, the insurance defendants argue that this claim must fail because the facts alleged do not establish a unique degree of trust and confidence between the parties, and alternatively, the alleged breach of duty did not cause the damages in issue.
Indeed, the complaint contains no language directly associated with a breach of fiduciary duty except that such a duty was breached. "[A motion to strike] does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings . . ." (Citations omitted; emphasis omitted.) Mingachos v. CBS, Inc., supra, 196 Conn. 108. As pleaded, the claim for breach of fiduciary duty has no life distinguishable from the breach of contract claim asserted in count two. The court cannot infer a special relationship between the parties when no facts to support it are alleged. Accord, Charter Oak Fire Insurance Co. v. Blue Sky Partnership, Superior Court, judicial district of Hartford, Docket No. 596646 (August 30, 2001, Berger, J.). The motion to strike count four is granted.
The insurance defendants argue in their motion to strike counts five (alleging unfair insurance practices) and six (alleging unfair trade practices) that the allegations contained in the complaint fail to support a claim under CUIPA. According to the defendants, for insurance-related conduct to constitute a violation of CUTPA, the conduct also must constitute a violation of CUIPA. The defendants further argue that in order to properly allege a CUIPA claim, Levin must plead that they committed the proscribed acts with such frequency as to indicate a general business practice. Instead, the defendants contend, Levin has pleaded facts relating to the one incident in suit, and those allegations are merely conclusory.
CUIPA at General Statutes § 38a-816 (6) defines unfair insurance claim settlement practices in pertinent part as "[c]ommitting or performing with such frequency as to indicate a general business practice any of the following: (a) Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue; . . . (c) failing to adopt and implement reasonable standards of or the prompt investigation of claims arising under insurance policies; . . . (j) making claims payments to insureds or beneficiaries not accompanied by statements setting forth the coverage under which the payments are being made . . ." Id.
These arguments were considered by the Supreme Court in Lees v. Middlesex Insurance Co., 229 Conn. 842, 643 A.2d 1282 (1994). In Lees, the plaintiff's home was destroyed by fire. She made two claims to her insurer, one for loss of her dwelling and the other for loss of its contents. Ultimately, the defendant insurer paid the claim for loss of the dwelling, but without explanation never made any payment on the claim for loss of its contents. The plaintiff then filed a three-count complaint alleging that the defendant insurer had breached the insurance contract, engaged in unfair insurance practices in violation of CUIPA, and engaged in unfair trade practices in violation of CUTPA. The defendant moved for summary judgment, claiming that its alleged conduct in failing to settle the plaintiff's loss of contents claim did not, as a matter of law, constitute an unfair or deceptive practice prohibited by CUIPA or CUTPA.
The trial court rendered summary judgment for the defendant, as affirmed by the Supreme Court, holding that "the undisputed evidence failed to satisfy the requirement that the defendant had committed or performed unfair claim settlement practices with such frequency as to indicate a general business practice; General Statutes § 38a-816 (6); and that absent a viable CUIPA claim, the plaintiff could not prevail under CUTPA." (Internal quotation marks omitted.) Id., 847.
In the appellate opinion, the Lees court explained that
[i]n requiring proof that the insurer has engaged in unfair claim settlement practices with such frequency as to indicate a general business practice, the legislature has manifested a clear intent to exempt from coverage under CUIPA isolated instances of insurer misconduct . . . The gravamen of the plaintiff's claim is that the defendant unfairly failed to settle her claim, and her claim alone. We conclude that the defendant's alleged improper conduct in the handling of a single insurance claim, without any evidence of misconduct by the defendant in the processing of any other claim, does not rise to the level of a general business practice as required by § 38a-816 (6).
(Internal quotation marks omitted.) Id., 849.
Moreover, if the CUTPA count (count six) is based on the same alleged unfair claim settlement practices as the CUIPA count (count five), then the CUTPA count requires proof that the defendants' conduct constituted a general business practice. Id., 850.
Levin's complaint is not yet before the court on a motion for summary judgment. On a motion to strike, it is merely necessary for the court to find that Levin has stated, not proven, a legal claim. The complaint alleges that Levin purchased the policy in issue pursuant to representations made to all members of NAIT, that the purchase of the policy would protect him and his general contractor from third-party actions for work-related injuries, that the defendants failed to adopt and implement reasonable standards for obtaining voluntary elections or waivers from prospective claimants, thereby exposing Levin to a civil action by Harris, that the defendants failed to adopt and implement reasonable standards for the prompt investigation of insurance claims, and that some or all of these practices have been committed with such frequency as to constitute a general business practice. Counts five and six survive the motion to strike.
CONCLUSION
The motion to strike the plaintiff's complaint (#128) is granted as to counts three and four and denied as to counts one, two, five and six.
McWeeny, J.