Opinion
No. CV 08 5007513
November 17, 2010
MEMORANDUM OF DECISION RE MOTION TO STRIKE, #140
I FACTS
On January 24, 2008, Raymond Rodriguez, as administrator of the estate of his father, Ramon Rodriguez, filed a wrongful death action against Ambassador Wheelchair Services, Inc., (Ambassador), in the judicial district of Hartford. In that action, Rodriguez alleges that Ambassador sent a wheelchair van to transport the decedent for his weekly dialysis treatment. While walking down the driveway to meet the van, the decedent fell to the ground and was then assisted into the van by the driver. He suffered a heart attack, and by the time the emergency medical personnel arrived at the scene, the decedent had expired. Rodriguez alleges that his father's death was the result of the negligence of the driver in not appreciating the severity of the decedent's condition and not taking action to save his life. In addition, he alleges that Ambassador was negligent in that it failed to properly train, educate and supervise its employees as to the proper protocol.
Lincoln General Insurance Co. (Lincoln), filed a suit against the estate and Ambassador, claiming there is no coverage for the allegations of negligence brought against it by the estate under the commercial automobile policy which Lincoln issued to Ambassador. Lincoln is seeking a declaratory judgment in this action, asserting it has no obligation to defend and indemnify Ambassador relative to the pending wrongful death action. Ambassador filed a motion for summary judgment on March 20, 2009, claiming that Lincoln has a duty to defend Ambassador in the wrongful death action. The court granted the motion for summary judgment on November 3, 2009, finding that Lincoln "has an obligation to defend [Ambassador] in the [wrongful death action.]" (Trombley, J.) The court did not go so far as to find that Lincoln also had a duty to indemnify.
The suit against Raymond Rodriguez, Administrator, was withdrawn on May 18, 2010.
Lincoln had filed a cross-motion for summary judgment, which the court denied.
". . . Lincoln's duty to indemnify may ultimately depend on the theory upon which any judgment which may be rendered on the underlying complaint is based . . . [I]t does appear that Lincoln, not only has a duty to defend, but may very well have a duty to indemnify." (Memorandum of Decision re Ambassador's Motion for Summary Judgment — #123; Lincoln General's Cross Motion for Summary Judgment — #127, November 3, 2009, Trombley, J.).
On January 19, 2010, Ambassador filed an amended answer, counterclaim and special defenses in order to augment the allegations contained within its original second and third counts of their original counterclaim to reflect that despite the court's decision in the motion for summary judgment, Lincoln continued to fail to provide a defense to Ambassador in the wrongful death action. In the first count of the amended counterclaim, Ambassador alleges a breach of contract as to Lincoln, in that Lincoln has acknowledged a duty to Ambassador, and it has "breached its claims handling and settlement obligations with respect to the insured Ambassador." Amended counterclaim, ¶ 9. Ambassador further alleges that as a result of Lincoln's conduct and failure to conduct claims handling and settlement procedures as part of the defense of the wrongful death action, and its failure to provide a defense in that action, Lincoln has breached its insurance contract with Ambassador. Id., ¶ 10.
In the second count, Ambassador alleges that Lincoln engaged in bad faith. The second count alleges, in pertinent part:
11. The declaratory judgment action initiated by Lincoln was adjudicated by this court when Judge Wilson J. Trombley granted [Ambassador's] motion for summary judgment and issued a decision on the same dated November 3, 2009.
12. On November 3, 2009, Judge Wilson J. Trombley ruled that Lincoln had an obligation to [Ambassador] with regard to the underlying matter.
13. Despite Judge Trombley's holding, Lincoln still refuses to provide a defense for its insured with regard to the underlying matter.
14. In continuing to refuse to provide [Ambassador] with a defense, [Lincoln] has placed its own interest ahead of those of the insured.
15. As a result of this conduct, and as a failure to conduct good faith claims handling and settlement procedures as part of the defense in the [wrongful death action], and its failure to provide a defense for the [wrongful death action], despite being court-ordered to do so, [Lincoln] has acted in bad faith. (Second Count of Ambassador's amended counterclaim, January 18, 2010.)
In its third count, Ambassador alleges that Lincoln breached its covenant of good faith and fair dealing. The third count alleges, in addition to incorporating the first fourteen paragraphs of the second count, in pertinent part:
15. In all contracts, including insurance contracts, there is implied a covenant of good faith and fair dealing.
16. As a result of this conduct and its failure to conduct good faith claims handling settlement procedures as part to the defense in the underlying matter, it has failed to provide a defense for the underlying matter despite being court-ordered to do so, [Lincoln] has breached the covenant of good faith and fair dealing with respect to Ambassador. (Third count of Ambassador's amended counterclaim, January 18, 2010.)
In Ambassador's prayer for relief in the counterclaim, it seeks attorneys fees and punitive damages, reimbursement for any settlement judgment, as well as an order that Lincoln be required to defend Ambassador.
By motion to strike dated March 18, 2010, Lincoln moves to strike the second and third count of Ambassador's amended counterclaim as well as the corresponding prayers for relief, and filed a memorandum in support of their motion. Ambassador filed an objection to the motion to strike; Lincoln filed a reply brief in further support of their motion to strike. The court heard oral argument on the motion to strike on October 18, 2010.
II DISCUSSION A. Motion to Strike
"Whenever any party wishes to contest (1) the legal sufficiency of the allegations of any complaint, counterclaim or cross claim, or of any one or more counts thereof to state a claim upon which relief can be granted . . . that party may do so by filing a motion to strike the contested pleading or part thereof." Practice Book § 10-39(a). "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.) Peter-Michael, Inc. v. Sea Shell Associates, 244 Conn. 269, 270, 693 A.2d 293 (1998). "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). The court must "construe the complaint in the manner most favorable to sustaining its legal sufficiency." (Internal quotation marks omitted.) Eskin v. Castiglia, 253 Conn. 516, 523, 753 A.2d 927 (2000). "A motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." (Internal quotation marks omitted.) Faulkner v. United Technologies Corp., supra, 240 Conn. at 588. In deciding a motion to strike, the "role of the trial court [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).
B. Bad Faith and Breach of Covenant of Good Faith and Fair Dealing
The essential allegations of Ambassador's second count — "Bad Faith" — and third count — Breach of Covenant of Good Faith and Fair Dealing — are the same. Ambassador's contention, predicated on the breach of contract claim as set forth in the first count of its counterclaim, is that Lincoln's failure to provide a defense in the wrongful death action is a breach of the covenant of good faith and fair dealing, which requires proof that Lincoln has acted in bad faith.
The requirements of pleading a breach of the duty of good faith and fair dealing are well established. "It is axiomatic that the duty of good faith and fair dealing is a covenant implied into a contract or contractual relationship . . . In other words, every contract carries an implied duty requiring that neither party do anything that will injure the right of the other to receive the benefits of the agreement . . . To constitute a breach of [the implied covenant of good faith and fair dealing], the acts by which a defendant allegedly impedes the plaintiff's right to receive benefits that he or she reasonably expected to receive under the contract must have been taken in bad faith. Bad faith in general implies both actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive. Bad faith means more than mere negligence; it involves a dishonest purpose." Scapa Tapes North America, Inc. v. Avery Dennison Corp., 384 F.Sup.2d 544, 560 (2005), citing De La Concha of Hartford, Inc. v. Aetna Life Ins., Co., 269 Conn. 424, 432-33, 849 A.2d 382 (2004). "Bad faith is defined as the opposite of good faith, generally implying a design to mislead or to deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation not prompted by, an honest mistake as to one's rights or duties . . . Bad faith does not imply 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.) Hutchinson v. Farm Family Casualty Insurance Co., 273 Conn. 33, n. 4, 867 A.2d 1 (2005), citing Buckman v. People's Express, Inc., 205 Conn. 166, 171, 530 A.2d 596 (1987).
The implied covenant of good faith and fair dealing is applicable to contracts of insurance. Verrastro v. Middlesex Ins. Co., 207 Conn. 179, 190, 540 A.2d 693 (1988); Magnan v. Anaconda Industries, Inc., 193 Conn. 558, 566, 479 A.2d 781 (1984); Hoyt v. Factory Mutual Liberty Ins. Co., 120 Conn. 156, 159, 179 A. 842 (1935). The plaintiff cites to several superior court cases in which bad faith claims were stricken in cases involving contracts of insurance because they were insufficiently pled and require specific allegations establishing a dishonest purpose or malice. See, e.g., Grant v. Colonial Penn Ins. Co., Superior Court, judicial district of Fairfield at Bridgeport, CV 95 321277, (January 16, 1996) ( 16 Conn. L. Rptr. 49); Liquore v. Assurance Co. of America, Superior Court, judicial district of New London, Complex Litigation Docket at Norwich, X04 CV 011234151 (March 19, 2002) (where allegations that insurer failed to act with reasonable promptness, failed to cover the claim, and failed to defend and indemnify the plaintiff were "simply claims that the defendant denied the plaintiff's claim for benefits under the policy," not claims for breach of covenant of good faith and fair dealing); Crespan v. State Farm Mutual Auto Insurance Co., Superior Court, judicial district of Litchfield, CV 05-4002121 (January 12, 2006) (granting motion to strike bad faith claim where insured alleged that insurer denied claim for benefits and did not reasonably investigate claim because the allegations lacked the sinister or dishonest attitude necessary); Janicki v. Massachusetts Casualty Insurance Co., Superior Court, judicial district of New London, #530774 (November 14, 1996) (granting motion to strike because "a [legal] conclusion, unsupported by any factual allegations is insufficient to sustain a claim of bad faith); and McCrea v. Louis Dreyfus Corp., Superior Court, judicial district of Danbury, No. 31 63 58 (September 28, 1994) [ 12 Conn. L. Rptr. 493] ("the mere allegation that the defendant willfully failed to perform certain obligations pursuant to [a] contract is insufficient to support [a bad faith claim]").
Another line of cases generally holds parties to a less stringent standard. In Algiere v. Utica National Ins. Co., Superior Court, judicial district of New London, Docket No. CV 04 0569670 (February 7, 2005), the court, in denying the defendant's motion to strike, noted that, "[a]lthough the plaintiff has not alleged that the defendant acted in bad faith or with a sinister motive she has alleged facts sufficient to reasonably infer that an improper motive or reckless indifference of the interest of others existed. The plaintiff has alleged that the defendant has knowingly, willfully, deliberately and repeatedly ignored the workers' compensation commission orders; such continued defiance is unlikely to be attributable to an honest mistake or mere negligence." (Emphasis added.) See also, Morin v. Tracy, Driscoll Co., Superior Court, judicial district of Hartford, Docket No. CV 03 0823241 (May 26, 2004) (allegation that insurance broker "knowingly omitted material information from the [insurance] application" sufficient to state a cause of action for breach of covenant of good faith and fair dealing); McGill v. Mutual of Omaha Ins. Co., Superior Court, complex litigation docket at Middletown, Docket No. X04 CV 04 0104343 (September 28, 2004) ("plaintiffs need only allege sufficient facts or allegations from which it may reasonably be inferred that the defendant breached the implied covenant of good faith and fair dealing").
Ambassador's bad faith claim and its breach of covenant of good faith and fair dealing claim are three fold: (1) that Lincoln's failure to conduct good faith claims handling settlement procedures as part of the defense of the underlying matter is bad faith; (2) Lincoln failed to provide a defense in the underlying matter; and (3) that by continuing to refuse to provide a defense to Ambassador, Lincoln has placed its own interests ahead of its insured. Lincoln contends that claims for bad faith and breach of the covenant of good faith and fair dealing each require that a plaintiff plead facts and conduct on the part of an insurer that was undertaken with the requisite mind set for bad faith, that is, with evil motive, dishonest purpose, moral obliquity, furtive design or ill will. It argues that Ambassador has made only conclusory allegations regarding its claims of bad faith, and, therefore, are legally deficient and must be ordered stricken.
In examining these allegations under either standard, the more strict standard in which it would be required to set forth specific allegations establishing a dishonest purpose or malice, or the less stringent standard in which there is no requirement of specific claims of malice or dishonesty but generally that the conduct at issue was engaged in knowingly or wilfully, Ambassador's allegations are legally sufficient to state a cause of action for breach of the implied covenant of good faith and fair dealing, by alleging facts sufficient to support its claim of bad faith. After the court issued its decision on Ambassador's motion for summary judgment, Lincoln's attorney sent a letter to Ambassador's attorney, which was submitted with Ambassador's Request for Leave to Amend Answer, Counterclaim, and Special Defenses. It reads:
. . . Please be advised that I have relayed to my client your request for a defense in the [wrongful death action.] As you are aware, my client has elected its right to appeal the decision . . . granting your client's motion for summary judgment in that [Lincoln] has a duty to defend. As a result of [Lincoln's] appeal, it will not be providing your client with a defense in the [wrongful death action.] However, [Lincoln] will reevaluate your request once the appeal has been decided. (Exhibit B.)
While Lincoln is certainly entitled to take advantage of any appellate rights they might have, the judgment remains during the pendency of the appeal even if it cannot be executed on. See, Miller v. Miller, 158 Conn. 217, 258 A.2d 89 (1969) (where judgment is on appeal, it is still deemed final until reversed, since the finality of a judgment is determined by the court rendering the judgment). See, also, Nowell v. Nowell, 157 Conn. 470, 254 A.2d 889, cert. denied, 396 U.S. 844 (1969). It is all of Lincoln's conduct that Ambassador alleges is actionable.
"For the plaintiff to recover for bad faith, it had to allege and prove that the defendant engaged in conduct design[ed] to mislead or to deceive . . . or a neglect or refusal to fulfill some duty or some contractual obligation not prompted by an honest mistake as to one's rights or duties . . ." (Emphasis added; internal quotation marks omitted.) Hunte v. Amica Mutual Ins. Co., 68 Conn.App. 534, 544-45, 792 A.2d 132 (2002). Ambassador has alleged that Lincoln has continued to refuse to defend Ambassador despite a court ordering it to do so. Such continued defiance is unlikely to be attributable to an honest mistake or mere negligence. It is well established in Connecticut that pleadings are to be construed "broadly and realistically, rather than narrowly and technically . . . As long as the pleadings provide sufficient notice of the facts claimed and the issues to be tried and do complaint is insufficient to allow recovery." (Citations omitted; internal quotation marks omitted.) Parsons v. United Technologies Corp., 243 Conn. 66, 83, 700 A.2d 655 (1997).
Construing these allegations most favorably to sustaining their sufficiency, the court concludes that the plaintiff has asserted a valid claim for breach of the covenant of good faith and fair dealing by successfully alleging a claim of bad faith. The second count which claims bad faith conduct by Lincoln is duplicative of the third count for breach of the covenant of good faith and fair dealing. Ambassador is ordered to replead the third count by setting forth the allegations of the second count to the extent that they have been incorporated in the third count.
C. Prayers for Relief
Lincoln also seeks to strike the prayers for relief seeking punitive damages and seeking attorneys fees.
As to punitive damages, Lincoln argues that the claims for bad faith and breach of covenant of good faith and fair dealing are legally insufficient, and a simple breach of contract claim as set forth in count one does not give rise to an award of punitive damages without allegations of wanton and malicious injury, evil motive and violence.
"Punitive damages are not ordinarily recoverable for breach of contract . . . This is so because . . . punitive or exemplary damages are assessed by way of punishment, and the motivating basis does not usually arise as a result of the ordinary private contract relationship. The few classes of cases in which such damages have been allowed contain elements which bring them within the field of tort." (Citation omitted.) Triangle Sheet Metal Works, Inc. v. Silver, 154 Conn. 116, 127, 222 A.2d 220 (1966). "The flavor of the basic requirement to justify an award of punitive or exemplary damages has been repeatedly described in terms of wanton and malicious injury, evil motive and violence. The Restatement declares that punitive damages may be awarded only for `outrageous conduct, that is, for acts done with a bad motive or with a reckless indifference to the interests of others.' Restatement, 4 Torts § 908, comment (b)." Id., 128; see also L.F. Pace Sons, Inc. v. Travelers Indemnity Co., 9 Conn.App. 30, 47-48, 514 A.2d 766, cert. denied, 201 Conn. 811, 516 A.2d 886 (1986).
The remedy of punitive damages is only available if the plaintiff alleges facts sufficient to show that the defendant engaged in conduct that was wanton, maliciously injurious, outrageous and done with evil motive and violence. Triangle Sheet Metal Works, Inc. v. Silver, supra, 154 Conn. 128. Malicious conduct is conduct that is done with "a motivating intent or design, actual or constructive, on the part of the defendants to harm the plaintiff by their conduct." Id.
In this case, Ambassador fails to allege specific facts to establish tortious conduct of such an outrageous nature as to sustain a demand for an award of punitive damages for breach of covenant of good faith and fair dealing.
Ambassador is also seeking "reimbursement for all costs and expenses including attorneys (sic) fees expended in the defense of this . . . action and pursuit of [the] counterclaim." Lincoln argues that this prayer for relief should also be stricken, since generally attorneys fees may not be recovered either as costs or damages absent contractual or statutory authorization.
"The general rule of law known as the American rule is that attorneys fees and ordinary expenses and burdens of litigation are not allowed to the successful party absent a contractual or statutory exception . . . Connecticut adheres to the American rule . . . There are few exceptions. For example, a specific contractual term may provide for the recovery of attorneys fees and costs . . . or a statute may confer such rights . . . [The Supreme Court] also has recognized a bad faith exception to the American rule, which permits a court to award attorneys fees to the prevailing party on the basis of bad faith conduct of the other party or the other party's attorney." (Citations omitted; internal quotation marks omitted.) ACMAT Corp. v. Greater New York Mutual Ins. Co., 282 Conn. 576, 582-83, 923 A.2d 697 (2007). In ACMAT, the court concluded that, "even without an authorizing contractual or statutory provision, a trial court may award attorneys fees to [an insurance] policyholder that has prevailed in a declaratory judgment action against its insurance company only if the policyholder can prove that the insurer has engaged in bad faith conduct prior to or in the course of the litigation." Id. 592.
As discussed above, Ambassador has asserted a valid claim for breach of covenant of good faith and fair dealing by sufficiently alleging bad faith. Whether Ambassador is able to recover attorneys fees will depend on whether it is successful in proving its claim of bad faith by Lincoln. Nevertheless, at this stage, having sufficiently alleged bad faith, the prayer for relief for attorneys fees shall stand.
III Conclusion
The plaintiff has alleged facts which are legally sufficient to sustain a claim of breach of the covenant of good faith and fair dealing. The motion to strike is granted as to the second count in that it is duplicative of the third count, and denied as to the third count, with Ambassador directed to replead the third count as directed above. The motion to strike is granted as to the prayer for relief for punitive damages, and denied as to the prayer for relief for attorneys fees.