Opinion
No. CV 03 0821900
February 18, 2004
MEMORANDUM OF DECISION RE DEFENDANT'S MOTION TO STRIKE
The defendant, Marsh, has filed a motion to strike counts ten, twelve and thirteen of the plaintiffs' complaint on the grounds that the plaintiffs have failed to allege a cause of action for promissory estoppel, breach of the covenant of good faith and fair dealing and a cause of action under the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes §§ 42-110a, et seq.
Marsh also moves to strike paragraphs C2 and C4 of the plaintiffs' prayer for relief on the grounds that the plaintiffs have not alleged that improper fees and charges were paid, nor have the plaintiffs cited any contractual or statutory basis for awarding attorneys fees. In addition, Marsh moves to strike paragraphs D2, D3, D4 and D5 of the prayer for relief, because they are based on "the legally insufficient CUTPA claim in count thirteen." These are dependent on the court's ruling, on the three counts mentioned in the above memorandum.
"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 . . . A motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court . . . [The court] take[s] the facts to be those alleged in the complaint . . . and [it] construe[s] the complaint in the manner most favorable to sustaining its legal sufficiency . . . Thus, [i]f facts provable in the complaint would support a cause of action, the motion to strike must be denied." (Citations omitted; internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "Moreover . . . [w]hat is necessarily implied [in an allegation] need not be expressly alleged." (Internal quotation marks omitted.) Gazo v. Stamford, 255 Conn. 245, 260, 765 A.2d 505 (2001).
COUNT X — PROMISSORY ESTOPPEL
Marsh moves to strike count ten of the plaintiffs' complaint for promissory estoppel on the ground that the plaintiffs have not sufficiently alleged facts to support each of the elements required to state a cause of action for promissory estoppel. "Section 90 of the Restatement [(Second) of Contracts] states that under the doctrine of promissory estoppel [a] promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise . . . A fundamental element of promissory estoppel, therefore, is the existence of a clear and definite promise which a promisor could reasonably have expected to induce reliance. Thus, a promisor is not liable to a promisee who has relied on a promise if, judged by an objective standard, he had no reason to expect any reliance at all." (Citation omitted; internal quotation marks omitted.) Stewart v. Cendant Mobility Services Corp., 267 Conn. 96, 104-05, 837 A.2d 736 (2003). "To succeed on a claim of promissory estoppel, the party seeking to invoke the doctrine must have relied on the other party's promise . . . That reliance, of course, may take the form of action or forbearance . . . Nevertheless, the asserted reliance, regardless of its form, must result in a detrimental change in the plaintiff's position." (Citations omitted; internal quotation marks omitted.) Id., 112-13.
The plaintiffs allege that Marsh represented to them that Pyramid was a named insured under their policy for professional liability coverage. In reliance upon Marsh's representation, the plaintiffs believed that Pyramid was covered under the insurance policy, and took no further action to obtain professional liability insurance for Pyramid or to ensure that Pyramid was indeed covered under the policies. In addition, however, Marsh argues that the plaintiffs must also plead that they exercised due diligence to know the truth, which they have not done. Specifically, Marsh contends that the plaintiffs had a duty to read the insurance policy on their own, and thus, could have determined that Marsh had not secured professional liability coverage for Pyramid. The plaintiffs argue in opposition that Connecticut courts have not required a party to plead due diligence as a separate element of a promissory estoppel claim. In Chotkowski v. State, 240 Conn. 246, 268, 690 A.2d 368 (1997), the court held that "[u]nder our well-established law, any claim of estoppel is predicated on proof of two essential elements: the party against whom estoppel is claimed must do or say something calculated or intended to induce another party to believe that certain facts exist and to act on that belief; and the other party must change its position in reliance on those facts, thereby incurring some injury." (Emphasis added; internal quotation marks omitted.)
While Marsh is correct in arguing that "[i]t is fundamental that a person who claims an estoppel must show that he has exercised due diligence to know the truth, and that he not only did not know the true state of things but also lacked any reasonably available means of acquiring knowledge"; Chotkowski v. State, supra, 240 Conn. 268 (internal quotation marks omitted); the courts have not required due diligence to be pleaded as a separate element of an estoppel claim. In this case, the plaintiffs specifically allege that Marsh represented to them that "it was an expert in commercial insurance and that it had sufficient expertise, thoroughness and professionalism to ensure that the Plaintiffs had adequate and sufficient coverage for all their risks of loss, including coverage for professional liability." (Plaintiffs' Complaint ¶ 12.) The plaintiffs further allege that because of Marsh's superior knowledge and skill in insurance matters, they put their trust and reliance upon Marsh to obtain the requested coverage for Pyramid, and to confirm that such coverage was in place from year to year. For purposes of a motion to strike, the plaintiffs have alleged sufficient facts to demonstrate that they had no reason to "know the true state of things — " specifically, that Marsh had not secured the insurance coverage. Marsh's motion to strike count ten for promissory estoppel is therefore denied.
COUNT XII — BREACH OF GOOD FAITH AND FAIR DEALING
Marsh moves to strike the plaintiffs' claim for breach of the duty of good faith and fair dealing on the ground that the plaintiffs have not alleged that Marsh's actions were conducted in bad faith. "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." (Citation omitted; internal quotation marks omitted.) Gupta v. New Britain General Hospital, 239 Conn. 574, 598, 687 A.2d 111 (1996). "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." (Citation omitted; internal quotation marks omitted.) Habetz v. Condon, 224 Conn. 231, 237, 618 A.2d 501 (1992).
In the present case, the plaintiffs have not alleged sufficient facts to show that Marsh's conduct was motivated by bad faith. In count twelve, the plaintiffs essentially repeat the allegations set forth in their breach of contract claim in count nine. Specifically, the plaintiffs contend that Marsh agreed to obtain professional liability insurance for Masonicare and Pyramid, and to confirm that such coverage was in place and in continuance from year to year. Marsh then breached this promise when it failed to ensure that Pyramid was included as a named insured, and "represent[ed] to Plaintiffs that such coverage was obtained . . ." (Plaintiffs' Complaint Count XII, ¶ 34.) Contrary to the plaintiffs' argument in their opposing memorandum, it is not implicit from Marsh's negligent misrepresentation that there was also a conscious deception intended to mislead the plaintiffs. "Absent allegations and evidence of a dishonest purpose or sinister motive, a claim for breach of the implied covenant of good faith and fair dealing is legally insufficient." Alexandru v. Strong, 81 Conn. App. 68, 81, 837 A.2d 875 (2004).
Marsh argues that the only conduct identified by the plaintiffs is Marsh's alleged failure to secure professional liability insurance for Pyramid, and its subsequent representations regarding the insurance coverage. Marsh disputes that these allegations, standing alone, are enough to maintain a cause of action for breach of the duty of good faith and fair dealing. The court agrees. The plaintiffs have not pleaded sufficient facts to show the state of mind required to support their claim for breach of the duty of good faith and fair dealing, and, therefore, Marsh's motion to strike count twelve of the plaintiffs' complaint is granted.
COUNT XIII — CUTPA
Marsh next moves to strike count thirteen of the plaintiffs' complaint, which alleges a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes §§ 42-110a et seq., on the ground that the conduct alleged does not reach the level required to sustain a claim of unfair insurance practices under the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a-815 et seq.
Marsh argues in the alternative that even if the plaintiffs have alleged a CUIPA violation under General Statutes §§ 38a-815(1)(a) or (6), such claims are barred by the three- year statute of limitations period set forth in § 42-110g(f). The court will not address this issue, however, because "[a] claim that an action is barred by . . . the statute of limitations must be pleaded as a special defense, not raised by a motion to strike." (Internal quotation marks omitted.) Girard v. Weiss, 43 Conn. App. 397, 415, 682 A.2d 1078, cert. denied, 239 Conn. 946, 686 A.2d 121 (1996).
"[I]n determining whether a practice violates CUTPA [our courts] have adopted the criteria set out in the cigarette rule by the federal trade commission for determining when a practice is unfair: (1) [W]hether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, [competitors or other businesspersons] . . . All three criteria do not need to be satisfied to support a finding of [a violation of CUTPA]." (Internal quotation marks omitted.) Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 644, 804 A.2d 180 (2002). Furthermore, "[General Statutes] § 42-110g(a) of CUTPA affords a cause of action to [a]ny person who suffers any ascertainable loss of money or property . . . as a result of the use or employment of a method, act or practice prohibited by section 42-110b . . . including a violation of [CUIPA]." (Internal quotation marks omitted.) Id., 645. "Case law has established that one of the standards for the determination of whether a particular act in the business of insurance constitutes an unfair or deceptive act is whether that act violates CUIPA . . . That is, if an act violates CUIPA, without more, it violates CUTPA." (Citation omitted.) Healthright v. Executive Risk Specialty, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 00 0272486 (June 28, 2001, Levine, J.).
The plaintiffs allege that Marsh committed unfair insurance practices under General Statutes §§ 38a-816(1) and (6). Marsh argues in opposition that it has violated neither subsection (1) nor subsection (6). First, Marsh claims that the plaintiffs have not alleged that Marsh engaged in any unfair claim settlement practices that would constitute a "general business practice" within the meaning of the statute. 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 . . ." "[A] CUTPA claim based on an alleged unfair claim settlement practice prohibited by § 38a-816(6) require[s] proof, as under CUIPA, that the unfair settlement practice has been committed or performed by the defendant with such frequency as to indicate a general business practice." (Internal quotation marks omitted.) Lees v. Middlesex Ins. Co., 229 Conn. 842, 850, 643 A.2d 1282 (1994). "[F]or a plaintiff to allege CUIPA and CUTPA violations successfully the plaintiff must allege more than a singular failure to settle a plaintiff's claim fairly. The plaintiff must allege that the defendant has committed the alleged wrongful acts with such frequency as to indicate a general business practice." Quimby v. Kimberly Clark Corp., 28 Conn. App. 660, 672, 613 A.2d 838 (1992), rev'd on other grounds, Hart v. Carruthers, 77 Conn. App. 610, 823 A.2d 1284 (2003). "In 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." (Internal quotation marks omitted.) Lees v. Middlesex Ins. Co., supra, 229 Conn. 849.
Marsh argues that the plaintiffs have alleged only a single act of purported misconduct, which is inadequate to demonstrate a general business practice. Specifically, Marsh argues that the plaintiffs' complaint pertains solely to the handling of its own insurance policy, and not to the handling of any other policy. The plaintiffs argue in opposition that Marsh's continual misrepresentation of the status of Pyramid's coverage for over five policy periods constitutes a "long practice of misrepresenting insurance coverage." (Plaintiffs' Opposing Memorandum, p. 21.) The court is unpersuaded by the plaintiffs' position. Although the plaintiffs allege numerous misrepresentations by Marsh, each representation pertains solely to the claim involving Pyramid's professional liability coverage. The court follows the decision in Lees v. Middlesex Ins. Co., supra, 229 Conn. 849, where the court held: "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)." The plaintiffs, therefore, have not adequately alleged that Marsh engaged in an unfair insurance settlement practice under § 38a-816(6). Accordingly, Marsh's motion to strike that portion of count thirteen is granted.
Marsh also argues that the plaintiffs have not alleged a cause of action for an unfair insurance practice under § 38a-816(1)(a). Under Section 38a-816(1)(a), an unfair method of competition and unfair and deceptive act or practice in the business of insurance is defined as the "[m]aking, issuing, or circulating, or causing to be made, issued or circulated, any estimate, illustration, circular or statement, sales presentation, omission or comparison which: (a) Misrepresents the benefits, advantages, conditions or terms of any insurance policy." Specifically, Marsh argues that the plaintiffs' conclusory language in paragraph 34 of the complaint that Marsh "misrepresent[ed] the benefits, advantages, conditions or terms of any insurance policy," is insufficient without facts to support these allegations. The court disagrees. In Healthright v. Executive Risk Specialty Insurance Co., Superior Court, judicial district of New Haven at Meriden, Docket No. CV 00 0272486 (June 28, 2001, Levine, J.), the court denied the defendant's motion to strike a CUTPA claim based on a violation of CUIPA § 38a-816(1)(a) in holding: "[T]he lone allegation that [the defendant] misrepresented an insurance policy is a sufficient statement of a CUTPA violation to defeat a motion to strike." The plaintiffs in this case have done more than merely allege that Marsh misrepresented Pyramid's coverage under their policy. In count thirteen, the plaintiffs incorporate their allegations from paragraph twenty of the complaint in which they list numerous representations made by Marsh concerning the insurance policy. Marsh's motion to strike count thirteen is therefore denied insofar as it pertains to an alleged violation of CUTPA based on an unfair insurance practice under § 38a-816(1)(a).
CONCLUSION
For the foregoing reasons, the court denies Marsh's motion to strike count ten, because the plaintiffs have adequately alleged a cause of action for promissory estoppel. The court grants Marsh's motion to strike count twelve based on a breach of the duty of good faith and fair dealing since the plaintiffs have not alleged that Marsh acted in bad faith. Marsh's motion to strike count thirteen of the plaintiffs' complaint based on a CUTPA violation is granted insofar as it alleges a violation of § 38a-816(6), but denied insofar as it alleges a cause of action under § 38a-816(1)(a).
Hale, JTR