Opinion
CV126032519
06-12-2017
Pine Orchard Yacht and Country Club, Inc. v. Sinclair Insurance Group, Inc.
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Thomas Corradino, Judge
The court will first discuss the factual allegations involved in this case and the legal claims raised. Certain aspects of the underlying factual background to the claim being made in this case are not disputed. The Pine Orchard Yacht and Country Club, Inc. (the Club) is located on land bordering the ocean. Buildings on the property include the clubhouse and several other buildings. The club contacted the defendant Sinclair Insurance Group Inc. for the purpose of obtaining flood insurance, Sinclair did procure a Natural Catastrophe Insurance, Program Commercial Insurance Certificate bearing Policy Number CNC1P206612-6 at an annual premium of $13,555.00. On August 28, 2011 a major storm occurred causing a loss to all its buildings and the contents of those buildings. A claim was made for these losses but the insurer only permitted coverage for flood damage to the club house. In the plaintiff's post-trial brief and in the Joint Trial Management Report the plaintiff claims, as the report, indicates that Sinclair " breached its contract by obtaining flood insurance which only covered the building and contents at its club house building, but which did not cover its other buildings, the contents of the other buildings or its land. The plaintiff claims (Sinclair) failed to obtain a policy of insurance properly written to protect the property as the plaintiff (Club) requested and as the (Club) should have been provided with in the proper discharge of the defendant's (Sinclair's) duties. The plaintiff (Club) alleges that it sustained uninsured losses to its property in the wake of Hurricane Irene in August 2011 as a result of the defendant's breach of contract." Thus as said in the plaintiff's post-trial brief: " The plaintiff alleges that the defendant (Sinclair) breached a contract to obtain a specifically requested coverage (flood insurance for all buildings and the contents located therein) and breached its duty of care when obtaining coverage." The revised complaint in count four is entitled " Breach of Contract as to Sinclair Insurance Agency" and states:
3. On or before April 4, 2011, the plaintiff contacted the defendant, Sinclair Insurance Group, Inc., for the purposes of procuring flood insurance on its building, land, personal property and other holdings in Branford, Connecticut.
4. The plaintiff in doing such sought the advice and assistance and expertise of the defendant to procure for the plaintiff the proper insurance that in the event of loss due to flood all of their buildings, premises and other incidental property would be covered for the loss by flood.
5. The defendant procured a Natural Catastrophe Insurance Program Commercial Insurance Certificate bearing Policy Number CNCIP206612-6 at an annual premium of $13,555.00.
6. The defendant, Sinclair Insurance Group, Inc., through its President, David N. Sinclair, is or should have been familiar with the insurance needs to protect the Plaintiff from damage and to provide insurance policies that properly and fully provided coverage for flood loss sustained by the property the plaintiff sought to insure.
7. On August 28, 2011, the plaintiff suffered a loss to its buildings and contents located herein.
8. The aforesaid policy of insurance was in full force and effect at the time of the losses sustained.
9. The Natural Catastrophe Insurance Program with its coverage underwritten by LLOYDS has declined to cover a portion of the plaintiff's losses.
10. LLOYDS has asserted that information provided to them by Sinclair Agency was either inaccurate or improper and therefore part of the plaintiff's losses are not covered.
The defendant in the Joint Trial Management Report denies that it breached any contract with the plaintiff but states " it obtained the specific insurance which the plaintiff (club) requested, which was flood insurance covering the club house and its contents, and that such insurance provided the full coverage which plaintiff purchased from the defendant. The defendant maintains that it was not asked to procure, and did not undertake to procure, insurance for plaintiff's (club's) other buildings, contents, or land.
(A)
The court will now discuss some of the legal issues presented by the facts and claims raised by the parties. It will then try to apply that discussion to the facts of this case in order to evaluate the validity of the claims being made.
(i)
(a)
As said in Shetucket Plumbing Supply Inc. v. SCS Agency Inc . 570 F.Supp.2d 282, 287 (2008): " Under Connecticut law, an action against an insurance broker for failure to procure insurance may be based on negligence or breach of contract . . . a breach of contract claim differs from a negligence claim in that it is based on a failure to perform a specific agreement . . . Here, plaintiff's breach of contract claim differs from their negligence claim in that it is based on defendant's failure to procure a policy providing blanket replacement cost coverage for all of plaintiff's properties. To prevail on the breach of contract claim, the plaintiffs have the burden of proving that the defendants promised to procure such a policy." (See also Ursini v. Goldman, 118 Conn. 554, 559-560, 173 A. 789 (1934).)
Earlier in the opinion the court said negligence rests on finding of a duty, breach of that duty, causation and injury. The court said that " the plaintiffs claim that defendants owed them a duty to use reasonable care to procure the coverage called for by the insurance proposal and binder and to provide prompt notice if they were unable to do so." Id. pp 285-86, of R& B Auto Center Inc. v. Farmers Group Inc., 140 Cal.App.4th 327, 337, 44 Cal.Rptr.3d 426 (2000), cited in statement of the general law on this issue in § 154 of the 43 Am.Jur.2d article on insurance at page 208. As noted in Couch On Insurance Volume 3 page 435: " an agent or broker is liable to his or her principle if by his or her fault or neglect the agent or broker fails to procure or renew insurance as the agent has contracted to do and as a result of the want of insurance, the principal suffers a loss. Liability exists for breach of contract or for a tort in negligently failing to perform a duty imposed by contract." See Bedessee Imports Inc. v. Cook, Hall & Hyde Inc., 847 N.Y.S.2d 151, 153, 45 A.D.3d 792 (2007); Broad v. Randy Bauer Insurance Agency, 275 Neb. 788, 749 N.W.2d 478, 483 (Neb., 2008); also see 43 Am.Jur.2d article on insurance at section 150, pp. 201-02 citing among other cases, Casas v. Farmers Ins. Exchange, 35 Kan.App.2d 223, 130 P.3d 1201, 1207 (Kan.App. 2005).
" A contracting party may be bound by the terms of the contract to perform it in a good and workmanlike manner. Moreover, as a general rule, there is implied in every contract for work or services a duty to perform it skillfully, carefully, diligently, and in a workmanlike manner. The court will discuss this later in the opinion but the specification of any negligence claim in this context seems to be based on the concept set forth in 17A Am.Jur.2d § 599 to the effect that
Failure to comply with this implied duty to perform in a skillful and workmanlike manner may not only defeat recovery but may entitle the other party to damages resulting from the unskillful and unworkmanlike performance . . . With respect to the skill required of a person who is to render services, it is a well-settled rule that the standard of comparison or test of efficiency is that degree of skill, efficiency and knowledge which is possessed by those of ordinary skill, competency and standing in the particular trade or business for which he (she) is employed.The genesis and imposition of any duty for this particular type of negligence, arises out of the contractual obligation. Thus in a case that has not been overruled, Hickey v. Slattery, 103 Conn. 716, 718-19, 131 A. 558 (1926), the court said:
The plaintiff is suing the defendant, a surgeon, for pain, suffering, incapacity, expenditures and losses which he alleges to be due for the failure of the defendant properly to set and treat his broken arm. The complaint is in two counts, the first relying upon the implied obligation of the defendant, arising out of his employment, to use proper skill and care, and the second resting upon the alleged negligence of the defendant in the way in which he set and cared for the arm. Undoubtedly, in such a case, the plaintiff may lay his action either in contract or tort.
However, it is a truism to say as Couch does in Volume 3, § 46: 65, page 46-190 that: " In the absence of any agreement or contract to effect, maintain, or renew insurance, no duty to do so arises." Referring to Couch and another treatise Avery v. Diedrich, 2007 WI 80, 301 Wis.2d 693, 734 N.W.2d 159 (Wis. 2007), held that Wisconsin and other jurisdictions hold that " an insurance agent does not have a duty to procure requested insurance coverage until there is an agreement that the agent will do so, " id. pg. 167.
Furthermore, the case of Sloan v. Wells, 251 S.E.2d 449, 296 N.C. 570 (1979), defines the nature of the request if it is to be a predicate for contract formation: " Obviously, liability for failure to procure insurance could not arise unless the agent had sufficiently definite directions from his principle to enable him to consummate the final insurance contract. Perhaps ordinarily the broker and his client expressly agree to all of the essential elements which are to be included in the final insurance contract. But such an express agreement is not necessary; the scope of the risk, the subject matter to be covered, the duration of the insurance and the other elements can be found by implication."
The court will now discuss four other cases which amplify and further define the ambit and nature of an insurance agent's contractual obligations and when they are incurred.
In Loevner v. Sullivan & Strauss Agency Inc. et al., 35 A.D.3d 392, 825 N.Y.S.2d 145 (2006), the plaintiff owned a boat on which he had insurance. He sued the agent who had sold him an umbrella liability policy for contract violation, since the agent did not inform him to get additional insurance for the boat prior to an accident involving the boat. The court repeated the basic law in this area saying: " An insurance agent or broker has a common law duty to obtain requested coverage for a client within a reasonable amount of time or to inform the client of the inability to do so . . . Thus the duty is defined by the nature of the client's request . . . Absent a specific request for coverage not already in a client's policy or the existence of a special relationship with the client, an insurance agent or broker has no continuing duty to advise, guide, or direct a client to obtain additional coverage." This observation led the court to reverse denial of summary judgment against the agent Whitman Ltd., who sold the umbrella policy to the plaintiff. The plaintiff also sued the agent who provided the basic insurance for the boat, the Sullivan Agency. The court also reversed the failure to grant this defendant's summary judgment motion. It held that although the application for insurance noted the plaintiff had an umbrella policy he only requested the minimum level of liability coverage. The court held Sullivan was only obligated to procure the specific coverage requested and there was no evidence that the plaintiff asked for additional coverage. The court also noted that Sullivan did not have a special relationship with the insured which would give rise to the potential of a continuing duty on the part of Sullivan to advise the plaintiff to obtain additional coverage.
In Hoffend & Sons Inc. v. Rose & Kiernan, supra, the policyholder was not held to have established that a specific request for coverage for the loss suffered was made. The policyholder's recollection of events was vague and he could not remember specific conversations on the subject. The court of appeals said the trial court properly granted summary judgment dismissing his claim against the insurance broker.
In LCEL Collectibles v. American Insurance Company, 228 A.D.2d 196, 643 N.Y.S.2d 102 (App.Div.NY Supreme CT, 1996), the court upheld the dismissal by the trial court of the plaintiff's suit against their insurance broker for the alleged failure to procure adequate insurance. The trial court held the defendant had " no duty to recommend flood insurance or to inspect the location of plaintiff's property to determine whether it was near a flood plain or swamp where plaintiff neither specifically requested such insurance nor communicated the area's susceptibility to flood damage . . . Plaintiff's request for " the best and most comprehensive coverage" did not trigger such a duty . . . nor did it relieve the plaintiff of its obligation to read the policy which contained an express exclusion for flood loss.
Although not exactly on point the case of Allstate Insurance Company v. William and Pamela Skipper et al., 135 N.C.App. 92, 518 S.E.2d 814 (1999), has interesting language. In that case the Skippers owned a boat. They had insurance on the boat providing coverage up to $100,000. They also had a homeowner's policy providing coverage in the same amount. The Skipper boat collided with another boat causing death and injury. The insurer sought a declaratory judgment to the effect that there was no coverage under the homeowner's policy for the boat. The appeals court upheld the trial court's granting of the insurer's summary judgment motion. The court noted that " there is no evidence to support a finding that, at the time they purchased the homeowner's policy, the Skippers stated or manifested to Allstate their intent to insure the boat under the homeowner's policy. We specifically hold that Tisdale's (insurer's agent) mere knowledge, at the time he issued the homeowner's policy, that the Skippers owned a boat which would otherwise be excluded from coverage thereunder, did not amount to a declaration by the Skippers that they intended the boat be covered by the homeowner's policy, " id. pg. 96.
Or as said in Section 46:28 of Couch On Insurance Vol 3 at pp. 46-53, 46-54: " The insured's agent must strictly follow the insured's instructions that are clear, explicit absolute and unqualified. It is clear, however, that this duty only follows upon the insured's general compliance with his or her duty to instruct his or her agent, " citing among other cases, British American Ins. Co. v. Wilson, 77 Conn. 559, 60 A. 293 (1905).
It is only when these predicate requirements are met that liability in contract and tort can be established as set forth in Hill v. Allstate Insurance Company, 354 F.Supp.2d 1192 (D.Colo. 2004). There the court noted that in a case where the plaintiff claimed the agent failed to advise him that he could apply for enhanced personal inquiry protection under his automobile policy, an action under Colorado law could be brought in contract or tort against the agent who had agreed to provide such protection. The court as quoted Couch on Insurance, Vol 3 § 46:46 an agent may be liable for failure to provide insurance in two situations:
(1) not only when there is a failure to obtain insurance coverage on an express order from the insured, but also where the agent has simply falsely informed the insured that coverage was obtained where it in fact was not, or advised the insured that coverage would be reinstated after its cancellation, when it was not, if, in their prior dealings, the agent failed to do so in a particular instance, or where the type of coverage or the amount procured was less than that desired by the insured.
(2) Where an insurance agent or broker promises or gives some affirmative assurance that he or she will procure or renew a policy of insurance under circumstances which lull the insured into the belief that such insurance has been in effect, the law will impose upon the broker or agent the obligation to perform the duty which the agent or broker has thus assumed.
(b)
The court would also note that as to the issue of any contractual obligations of an insurance agent to an insured the concept of an implied contract must be addressed.
There are basically three types of contracts, an express contract, an implied contract which are true contracts and a so-called implied in law contract which is created by the courts to avoid unjust enrichment. In 17 Am.Jur. 2d, " Contracts" at Section 12, page 48 it states: " A contract is express if its terms are stated by the parties either orally or in writing, and it is implied if its terms are not so stated. In other words, an implied contract is one in which some or all of the terms are inferred from the conduct of the parties and the circumstances of the case, though not expressed in words, " cf. Vertex, Inc. v. Waterbury, 278 Conn. 557, 571, 898 A.2d 178 (2006), Auto Glass Express v. Hanover Ins. Co., 293 Conn. 218, 233, 975 A.2d 1266 (fn.7). In Janusauskas v. Fichman, 264 Conn. 796, 804, 826 A.2d 1066 (2003), the court quoted from an earlier case and said " Whether (a) contract is styled express or implied involves no difference in legal effect, but lies merely in the mode of manifesting assent . . . A true implied (in fact) contract can only exist (however) where there is no express one"; this reflects the general law, see 17 Am.Jur.2d " Contracts, " at Section 17, pp. 52-53; as said in Section 17 which cited Janusauskas . . . " if there is an express contract, no recovery can be had on the theory of implied contract . . . However, implication may be necessary and proper to determine the full and exact meaning of an express or oral contract, " id., at pp. 52-53. Janusauskas quotes an earlier case, Rahmati v. Mehri, 188 Conn. 583, 452 A.2d 638 (1982), where the court said: " It is not fatal to a finding of an implied contract that there were no express manifestations of mutual assent if the parties by their conduct, recognized the existence of contractual obligations, " 188 Conn. at page 587, see also Corriveau v. Jenkins Brothers, 144 Conn. 383, 387, 132 A.2d 67 (1957). It should be emphasized that " a contract implied in fact, like an express contract, depends on actual agreement, " Reynolds v. Chrysler First Commercial Corp., 40 Conn.App. 725, 730, 673 A.2d 573 (1996). In other words " the test is whether the conduct and acts of the parties show an agreement, " Brighenti v. New Britain Shirt Corp . 167 Conn. 403, 406, 356 A.2d 181 (1974). Also it should be kept in mind that, for example: " If A telephones a plumber to come to A's house to fix a broken pipe, it may be inferred that A has agreed to pay the plumber a reasonable fee for the plumber's services although the parties did not talk about compensation. The contract is partly express and partly implied in fact, " Calamari & Perillo On Contracts, 6th ed., § 1.8, page 19.
(c)
To return to basics, the article in 17 Am.Jur. 2d, Section 1 defines contract at two points (1) " a contract has been defined as an agreement to do or refrain from doing a particular thing upon sufficient consideration" (2) " A contract is an obligation which arises from actual agreement of the parties manifested by words, oral or written, or by conduct. The term 'contract' has been held to include every description, agreement or obligation, whether verbal or written, by which one party becomes bound to another to pay a sum of money to perform or commit to do a certain thing." The section cites Willamette Management Associates Inc. v. Palczynski, 134 Conn.App. 58, 72, 38 A.3d 1212 (2012).
(ii)
The result of the foregoing discussion, is that given the commonly accepted parameters of contract obligations and liability as said in Transportation Insurance Company v. AARK Construction Group, 526 F.Supp.2d 350 (E.D.N.Y, 2007); " 'Insurance agents or brokers are not personal financial counselors and risk managers, approaching guarantor status . . . The insurance bro The result of the foregoing discussion, is that given the commonly accepted parameters of contract obligations and liability as said in Transportation Insurance Company v. AARK Construction Group, 526 F.Supp.2d 350 (E.D.N.Y, 2007); " 'Insurance agents or brokers are not personal financial counselors and risk managers, approaching guarantor status . . . The insurance broker-insured relationship is not a professional one which would normally give rise to a continuing duty to provide ongoing guidance because an insured is in a better position to understand its needs than are insurers . . . Thus a broker's duty is defined by the nature of the customer's request for coverage . . .' Insurance agents have a common law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so, however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage, " also see Empire Industrial Corp v. Insurance Co. of North America, 641 (NEker-insured relationship is not a professional one which would normally give rise to a continuing duty to provide ongoing guidance because an insured is in a better position to understand its needs than are insurers . . . Thus a broker's duty is defined by the nature of the customer's request for coverage . . .' Insurance agents have a common law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so, however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage, " also see Empire Industrial Corp v. Insurance Co. of North America, 641 (N.E.2d 345 (1990). But courts have gone beyond contract law in certain situations where equities and fairness require the imposition of liability on insurance agents that is not based on a violation of contractual agreements.
Courts have held that if a special relationship exists between the insurance agent or broker and the insured this will trigger the " duty to advise" Casey v. Phelan Insurance Agency, 431 F.Supp.2d 888 (N.D. Indiana, 2006). There the court said that " factors manifesting a special relationship include (1) exercising broad discretion to service the insured's needs (2) counseling the insured concerning specialized insurance coverage (3) holding oneself out as a highly skilled insurance expert, coupled with the insured's reliance upon the expertise, and (4) receiving compensation, above the customary premium paid, for the expert advice provided, id. pp. 897-98, also see Avery v. Diedrich, The Diedrich Agency (2007 WI 80, 301 Wis.2d 693, 734 N.W.2d 159, 165, 166 (2007). In National Farmers Union Standard Insurance Company v. Soreris River Telephone Mutual Aid Cooperative, 75 F.3d 1268, 1274 (CA8, 1996), the court cited Minnesota law to the effect that " an expanded duty or standard of care may arise on the part of an insurance agent on the basis of a special relationship between the insurance agent and the insured." The court noted that in another case the Minnesota Court of Appeals held that whether an agent has a duty to inform an insured about " possible gaps in coverage depends on the relationship of the parties, specific requests of the insured and the professional judgment of the agent." Along these lines the New York Court of Appeals in Voss et al. v. The Netherlands Insurance Company, 22 N.Y.3d 728, 985 N.Y.S.2d 448, 8 N.E.3d 823 (2014), said as a general rule an insurance broker has a common law duty to obtain requested coverage in a reasonable amount of time or inform the client of their inability to do so but " they have no continuing duty to advise, guide or direct a client to obtain additional insurance." But the court went on to say that " Where a special relationship develops between the broker and the client we have also indicated that the broker may be liable, even in the absence of a specific request, for failing to advise or direct the client to obtain additional coverage." The court went on to define special relationships as situations where " (1) the agent receives compensation for consultation apart form the payment of premiums (2) there was some interaction regarding a question of coverage, with the insured relying on the expertise of the agent or (3) there was a course of dealing over an extended period of time which would have put objectively reasonable insurance agents on notice that their advice was being sought and specially relied on, " id. page 828.
Two cases also suggest that special circumstances exist warranting a finding of negligence against an insurance broker where he or she was asked for advice about a particular coverage issue and the advice was not correct or reasonable, Buente v. Allstate Insurance Co . 422, F.Supp.2d 690, 697, 698 (S.D.Miss, 2006). Martinonis v. Utica National Insurance Group, 65 Mass.App.Ct. 418, 840 N.E.2d 994, 997 (App. CT of Mass, 2006). The foregoing cases represent the general law in this area, see 43 Am.Jur.2d, " Insurance, " Section 149 Duty to Advise, Couch on Insurance, Volume 3, Section 46:38 Duty to Keep Insured Informed-When relationship gives rise to duty to give advice . Connecticut has expanded on this duty to advise concept that is related to the concept of professional negligence. In other words an insurance agent is viewed as an individual with special skills and when a person comes to the agent requesting insurance coverage the agent has a duty to give advice that is correct and reasonable but is also complete. This duty is not related to a strict contract claim or a negligence claim based on negligent performance of a specific contractual request. In Byrd v. Ortiz, 136 Conn.App. 246, 44 A.3d 208 (2012), the court relied on the earlier case of Dimeo v. Burns, Brooks & McNeil Inc., 6 Conn.App. 241, 504 A.2d 557 (1986). Byrd said at page 255:
In support of their argument that an insurance agent has no duty to advise an insured of the sufficiency of insurance coverage, the defendants attempt to distinguish Dimeo . We are not persuaded. The plaintiff in Dimeo alleged that the insurance agent was negligent in " failing to offer and obtain $300,000 of [uninsured/under insured motorist] coverage, which was the amount necessary for reasonably adequate coverage" and " fail[ing] to advise the plaintiff to obtain uninsured motorist coverage in that amount . . ." Id., at 242, 504 A.2d 557. On appeal, this court was tasked with examining the adequacy of the trial court's charge to the jury on the applicable duty of care. This court concluded that the charge, which included the instruction that " an [insurance] agent has the duty to explain uninsured motorist coverage, to explain the consequences of not having a sufficient amount of such coverage, to recommend the proper amount, and to attempt to procure that amount and offer it to the client, " was a correct statement of the law. Id., at 245, 504 A.2d 557.
The Dimeo court itself upheld an instruction by the trial court in reaching its decision which the Dimeo court said instructed the jury that selling insurance is a specialized field with specialized knowledge and experience and that an agent has the duties to advise the client about the kind and extent of desired coverage and to choose the appropriate insurance for the client.
Additionally, it should also be noted that there is case law to the effect that under certain circumstances a claim can be made that an insurance broker is liable for failure to give necessary advice or giving false assurance on coverage thus violating a fiduciary duty the agent had to its client, Tornado Technologies Inc. v. Quality Control Inspection Inc., 977 N.E.2d 122, 2012 Ohio 3451(2012) (Ohio) (additional coverage issue where client and agent mutually understand a relationship of special trust had been established, Bentley v. North Carolina Insurance Guaranty Assoc., 107 N.C.App. 1, 418, S.E.2d 705, 712 (N.C., 1992) (Fiduciary duty to keep insured correctly informed of his or her coverage where client shows a continuing relationship and a request for advice on possible changes in the insured's circumstances).
The point of the foregoing discussion in this section of the decision, B(ii) is that imposition of liability on insurance agents can be based on negligence, equitable, or fiduciary theories that have nothing to do strictly with the application of contract law and are analytically different from liability imposed on the basis of contract violation or negligence arising from a failure to meet contractual obligations.
C.
The court will now try to apply the foregoing to the facts of this case. The first question presented is whether a breach of contract claim has been established by the plaintiff.
Michael D'addetta was the fact witness relied upon by the plaintiff to establish its breach of contract theory of the case. He was the general manager of the club since 1989 and one of his duties involved the procurement of insurance for the club and its property which included the clubhouse and the buildings previously mentioned. Mr. D'addetta testified that an insurance agency known as V.F. McNeil prior to 2006 provided insurance coverage for the club--everything was insured, V.F. McNeil " had the whole package" and " annually they came in and provided the entire policy, asked if there were any differences in valuation, wages for workman's comp. things like that. They also indicated anything that they felt were gaps or omissions. And they brought that to our attention every year and documented it." V.F. McNeil had been the club's insurance agent prior to 2006 for about eighty years. As of that date the clubhouse was insured for the risk of flood and the decision not to insure the other buildings for that risk was made in connection with V.F. McNeil. On March 8, 2006 Mr. Sturgess, president of V.F. McNeil, wrote D'addetta to the effect that the clubhouse flood insurance coverage of $3,000,000 would entail a higher premium jumping from $7,450 to $26,000. Mr. D'addetta was at first vague about receiving the letter but conceded it was addressed to him and as questioning proceeded on its contents testified he understood its contents. He was aware of the fact that the pro shop and apartment buildings had no flood insurance which the letter pointed out. If coverage was desired Sturgess told D'addetta an elevation certificate for the pro shop had to be furnished. D'addetta first said Sturgess told him this in the letter, he knew what an elevation certificate was but then said: " I don't remember furnishing one for--for the clubhouse."
Mr. D'addetta testified that it was after the receipt of the letter that Mr. Sinclair, president of the Sinclair Insurance agency (Sinclair) " came into the picture." It is in this factual context that the court will examine the testimony to determine whether Sinclair breached a contract either express or implied to provide flood insurance for any other club buildings besides the club house.
As the court has previously discussed at the core of the concept of " contract" is the concept of an agreement to do or refrain from doing a particular thing upon sufficient consideration. In Black's Law Dictionary, 10th ed., " agreement" is defined as a mutual understanding between two or more persons about their relative rights and duties regarding past or future performances; a manifestation of mutual assent by two or more persons." Black quotes from two treaties to further define the term saying " every contract is an agreement." As said in Williston: " An agreement, as the courts have said, is nothing more than a manifestation of mutual assent by two or more parties legally competent persons to one another.
In this case that can only mean that for a contractual relationship to be found D'addetta, representing the club and Mr. Sinclair, the president of the defendant insurance agency, mutually agreed at D'addetta's request to provide flood insurance in an increased amount for a stated premium for the clubhouse and the other buildings on club property which up to 2006 had no flood risk insurance.
Let us begin with the testimony of Mr. D'addetta. Mr. Sinclair came to see him, apparently at the request of Mr. Drummond, who was on the club's finance committee. Mr. D'addetta testified as follows concerning this meeting:
Mr. Drummond said the purpose of this meeting was to see if the club could get a better price on its insurance. Mr. Sinclair was a club member and also an insurance agent. The meeting occurred after Mr. D'addetta received a letter from Mr. Sturgess of V.F. McNeil tripling the premium for the clubhouse flood insurance although Drummond could not remember the specific insurance involved.
Q. Okay. Now, did you specifically request that Mr. Sinclair insure any particular buildings for flood coverage?
A. No.
Q. Did you specifically say what buildings you wanted covered for the risk of flood?
A. No.
Q. Did Mr. Sinclair ever make you any promises about what buildings the Lloyd policy would cover for flood?
A. We never addressed it.
Q. Okay. Now, even though you knew that your existing flood policy with V.F. McNeil did not cover flood for the other buildings, you didn't ask Mr. Sinclair anything what the scope of the coverage under his flood policy would be, is that accurate?
A. It's accurate.
Q. Fair to say Mr. Sinclair never specifically told you or represented to you that the other buildings would be covered under his flood policy, correct? Did he ever specifically say to you in words, I am going to cover your other buildings under this flood policy? Did he say those words?
A. He neither said it, nor said they weren't.
Q. Okay. I'm only interested in what he said, I'm not interested in what he didn't say.
A. Sure. All right.
Q. He never said those words to you, correct?
A. Correct.
As noted previously at the time in which Mr. Sinclair met with Mr. D'addetta the club only had flood insurance for the club not any other buildings. Mr. D'addetta knew that there was no flood coverage for these other buildings. Mr. D'addetta said when he first met with Mr. Sinclair after the letter from Mr. Sturgess, Sinclair wanted to bid on the " whole package" which the court takes as meaning all types of insurance for the clubhouse and other buildings. But Sinclair then said " keep your insurance coverage with V.F. McNeil" but I'd like to quote the flood. Then on direct the following occurred:
Q. When you discussed the placement of flood insurance with Mr. Sinclair, what did he say to you if anything?
A. To my recollection, he just said I wanted to take--I'll quote the flood insurance. He didn't really--We didn't get into specifics.
The foregoing testimony of Mr. D'addetta does not indicate that the risk presented by flood damage to what the court will call the outbuildings was ever discussed.
The determination of coverage must be based on the risk of possible loss measured in conjunction with the financial harm that would thereby be incurred as a result of that loss to the prospective insured. The function of the insurer is to fairly spread the cost of insurance among prospective insured in such a way as to reflect the risk of loss and the cost thereby incurred to parties seeking insurance determining the cost of insurance on a comparative basis depending on risk of loss and amount of loss. This must be the aim of the insurer not only to fairly decide the amount of premiums for particular prospective insured but also to ensure the economic survival of the insurance companies themselves--how else could an insurance company rationally estimate the possible cost of the product it is selling? In other words as said in the cases there must be a specific agreement. Why is this necessary?
As more aptly put in New Appleman On Insurance Volume 1, Chapter One, page 1-1:
" Risk exists throughout the world; life is uncertain, and we cannot foresee exactly what will happen in the future. These risks create insecurity, and sometimes insecurity is undesirable. Insecurity can prevent business activity, stifle economic development, and cause personal anguish. There are a variety of techniques of managing risk, but at some point it is desirable for risk-averse persons to transfer their risk to another entity. Markets exist where these risks can be transferred, and the mechanism for doing so is insurance. Insures pay a premium to the insurer in exchange for the insurer's promise to assume the insured's risk. Taking advantage of the law of large numbers, the insurer can distribute the risks assumed in a variety of similar transactions across a large pool of insures and thereby effectively manage the risk, earning a return in the process."
As further said at page 1-5: " Insurance is traditionally understood as a contractual arrangement in which an insurer premises to assume the insured's risk of loss in exchange for a premium paid by or on behalf of the insured."
If the insurer is required to assume a risk which was not discussed and thus taken into account and bargained for, the whole mechanism breaks down because there is no way to determine and allocate risk.
In this regard it is instructive to move from general comments of Mr. D'addetta's to the particular. One conversation D'addetta had with Sinclair is instructive in that it concerned certain items located in one of the club's outbuildings which could be the subject of flood caused loss: On cross-examination the following occurred:
Q. The mowers and sprayers and other stuff in that building, those were all things that before Sinclair ever got involved, the club had made a decision to not insure for flood?
A. For flood, yes.
Q. Correct. And did you ever talk about those different contents with Mr. Sinclair with respect to flood insurance?
A. No. No.
Q. No request to him for flood insurance for those, no promises by him to you for flood insurance for those, correct?
A. Correct.
As said in Boritz v. New Jersey Mfg. Ins., 968 A.2d 1223, 1226, 406 N.J.Super. 640 (N.J.A.D. 2009): " An insurance policy is an agreement that 'sets forth in fundamental terms, the general outlines of coverage' . . . The premium paid for insurance coverage 'does not buy coverage for all . . . damage but only for that type of damage provided for in the policy.'" Unless both parties to a prospective insurance agreement were aware or made aware of damage possibilities and their possible extent how could an agreement be arrived at?
In fact prior to the loss in this case to the outbuildings on which no flood insurance was placed, as noted Mr. D'addetta admitted Sinclair never made a statement to him " about which building or buildings were covered for flood."
Mr. D'addetta's testimony as to the flood insurance situation post-2006 is nothing but consistent with the foregoing. The following quotation from the transcript refers to " policy" meaning flood insurance policy:
Q. During the years 2006 up until 2011 when the last policy was issued did you have any other additional conversations with Mr. Sinclair, other than what you've already talked about?
A. I don't recall any.
Q. During any of those five years, did you ever, at any time, ask Mr. Sinclair, Hey, does--does this policy cover me for my other buildings?
A. No.
Q. Okay. Did Mr. Sinclair ever tell you at any time during those five years that, that policy covered you for other buildings other than the clubhouse?
A. No.
The policies issued on a yearly basis from 2006 to 2011 provided flood insurance for the clubhouse. No such coverage in the policies was provided for the out buildings where the loss occurred which is the subject of this litigation.
In fact, given the case law previously discussed from Connecticut and other jurisdictions Mr. D'addetta's testimony does not establish there was an express contract between the club and Sinclair to provide flood insurance for the so-called out buildings. This is so because there was no agreement between the parties that Sinclair would provide this flood insurance, Shetucket Plumbing Supply Inc. v. SCS Agency, supra , Ursini v. Goldman, supra, as Couch says in Volume 3, § 46:65 in the absence of an agreement to procure certain insurance there is no duty to do so, page 46-190.
But in resolving this issue it is also necessary to examine the testimony of Mr. Sinclair. In March of 2006 he was the president of the Sinclair Insurance Group. Sometime in March Mr. Sinclair testified, Mr. D'addetta contacted him as a result of receiving a letter from Mr. Sturgess of V.F. McNeil that the cost of flood insurance for the main clubhouse would treble in amount from $7,450 to $26,000 by way of premium. When they met Sinclair reviewed the Sturgess letter which also discussed the premiums that would be required for flood insurance on the outbuildings. Sinclair candidly admitted that he reviewed the entire insurance package V.F. McNeil held for the clubhouse and outbuildings but decided to agree only to provide flood insurance for the clubhouse. He went further to say that he discussed the Sturgess letter with D'addetta and told the latter he should get flood insurance for the outbuildings through V.F. McNeil; the Sturgess letter quoted some of the premiums on flood insurance for the outbuildings. Sinclair said D'addetta told him at this meeting that he was going to buy flood insurance for the two outbuildings; he really did not want " to change from V.F. McNeil anyway." Interestingly D'addetta was never called on rebuttal to dispute Sinclair's statement to the effect that Sinclair told him he should procure flood insurance for the outbuildings through V.F. McNeil or that he told Sinclair he would do so.
In any event, the Sturgess letter was discussed by Sinclair and D'addetta during their meeting.
Sinclair said he did not get into specifics in discussing the outbuildings or coverage for them because he was specifically contacted about the premium increase for Flood insurance on the clubhouse. He was not contacted on the basis of " give me your opinion on all the insurance we have." He referred to the Sturgess letter and said " they should execute it" --the letter as noted quoted flood insurance for two of the outbuildings, given the deductible involved Sinclair said he told D'addetta and given the premiums, not to procure flood insurance for the outbuildings would be foolish but he was not contacted for that purpose.
In any event Sinclair said D'addetta never asked him to insure any other building than the clubhouse. He did admit he would have gotten the same price for flood insurance as some other agent. He also admitted he procured earthquake insurance for the clubhouse although it was not asked for--the question then becomes why not provide for flood insurance for the outbuildings Sinclair said he was only asked by D'addetta to procure flood insurance for the club house, and the earthquake insurance was a bonus. But Sinclair's concise response as to why he directed D'addetta to go to V.F. McNeil for this flood insurance seems credible:
And the premiums are very small, it's a lot of work and Paul Sturgess is a good personal friend of mine who's insured the club for eighty years. So, why not let him write it? He writes all the other coverage for the thing, he had done all the work on it, done all the research on it, what the premium would I--I was doing the club a favor.
Sinclair's testimony also supports the position that there was no express or implied contract to procure flood insurance for the outbuildings. But let us return to the flood coverage issue. At half the premium Sinclair could procure increased coverage for the flood peril. The premium would be--$13,555, as compared to $26,000--the latter figure representing a tripling of the premium the club had been paying for flood insurance under the policy provided by V.F. McNeil. At two points in his testimony D'addetta said the fact that flood insurance coverage for the club house increased by such a " dramatic amount" led him to believe the club had flood insurance coverage on the outbuildings. Even if that is credited it does not support the plaintiff's position that the outbuilding coverage was the result of mutual agreement but an inference D'addetta drew on his own that must be read against background of previously discussed testimony by him that he and Sinclair never discussed flood insurance coverage for the outbuildings. Furthermore, D'addetta agreed with the court's observation that given the reduction in premium for greater coverage that he had " an incentive to get coverage for the clubhouse from Mr. Sinclair apart from whether or not there was coverage for the other outbuildings."
But again the foregoing has nothing to do with establishing there was a contractual agreement between the parties and in fact indicates the contrary. But even if somehow the " increase" in flood insurance is attempted to be used to advance some implied contract theory, it does not have any weight. The flood insurance Sinclair procured on the clubhouse totaled $3,750,000 but in the March 8, 2006 letter Mr. Sturgess, president of V.F. McNeil wrote to D'addetta he recommended the same coverage should be for $3,800,000--not the " dramatic' increase suggesting to a rational insured that his, her or its 2006 policy and policies for several years thereafter would provide flood insurance for the clubhouse plus six other outbuildings.
What further supports the position that there was no express or implied contract to insure the outbuilding for flood damage is some evidence and testimony that could be construed as directly supporting a finding that the club, acting through D'addetta knew or should have known there was no contract for such insurance and impeaches a contrary position.
Mr. D'addetta at two points said he signed an application for the insurance Sinclair obtained for the club. A policy application (Ex. 1) was introduced into evidence. It is unsigned but indicates the coverage was on one building, which could only be the clubhouse. Earthquake and flood were checked off as the " perils to be uninsured." The policy is labeled Insure Cat. The policy referred to listed the total value insured as $3,750,000. There is no reference for flood insurance for any other buildings on the property, specifically the outbuildings. The proposed effective date of the policy is 4/4/06. Twice in his testimony D'addetta said he must have signed an application but he could not say Exhibit 1 was a copy of what he signed. Sinclair on the other hand testified that Exhibit 1 was a copy of the application D'addetta signed in his presence. He tried to get the original signed application but the insurer could not locate this ten-year-old (at time of trial) document since it had been destroyed. If a signed document had been located and submitted into evidence the breach of contract claim would fail since it would be assumed D'addetta read the application which said one building i.e. the clubhouse only, would be provided with flood insurance. It is difficult to understand the reasoning by which the court could dismiss consideration of Exhibit 1, unsigned though it was. Was it concocted? If D'addetta signed an application which he presumably read, would he not have remembered if it explicitly provided flood insurance protection for the outbuildings?
On redirect there was an attempt to explain all this away but, at least to the court it was not convincing. The following occurred upon questioning by plaintiff's counsel:
Q. Mr. D'addetta, in the past is it not fair to say that the agents have sometimes completed the applications without you knowing about it? A. Could very well be. I don't have aWould the agents sign their own names or perhaps forge the insured's name? Would something like this be done to limit coverage on the chance of a possible suit a decade later for a hypothetical loss? What motive would an agent have to do this?
Furthermore, Exhibit D was introduced into evidence and as D'addetta said it shows coverage through Sinclair for earthquake and flood. It is for a policy that ran from 4/6/2000 to 4/4/2007. It refers to coverage for a " building" and " contents" giving the total value of the insured property as $3,750,000--the amount the clubhouse was insured for. At the bottom of the document it says " contact your provider with coverage questions, requests, or concerns." It mirrors the coverage information on Exhibit 1 and the premium which explicitly lists one building as being covered. Perhaps more to the point it was mailed to the club. In Connecticut the law is that if a letter is mailed to the right address with the correct postage it is presumed it was received, Precision Mechanical Services Inc. v. Scottsdale Ins. Co. (NH CV98-0416692). No contact for queries about coverage or concerns was offered into evidence.
Along the same line of inquiry, the defendant introduced three documents, Exhibits J, K, and L into evidence which are labeled " renewal notice" of " policy."
They represent policy renewals for three years after the initial policy. For three years perils covered included flood and earthquake coverage. They all list the total amount insured as $3,750,000; the same figure in the first policy for the clubhouse and its contents per Exhibit I, the application form. The mailing address on each of the documents is the same, 2 Club Way on each of the documents it says: " Please contact your producer with coverage questions requests or concerns." No evidence was introduced that D'addetta or any other club official raised the alarm that if all four exhibits are read together, Exhibits I, J, K and L, no flood coverage is provided for outbuildings. Even if the argument could be raised that after all Exhibit I is unsigned and cannot be credited as noted Exhibits J, K and L all provide coverage for $3,750,000 which the application form, Exhibit I, lists as the value of the clubhouse and its contents. Nothing was offered to indicate that these documents changed the coverage amounts and the explicitly referred to insured property in Exhibit I.
Another relevant and confusing aspect of Mr. D'addetta's testimony, at least to the court concerned elevation certificates. At one point he said he did not remember getting an elevation certificate for the clubhouse but he agreed that generally speaking an elevation certificate " was something you would have to provide if you were going to get flood insurance." An elevation certificate refers to the elevation of a building, for example in relation to the mean high tide--something that would seem to be important to an insurer asked to provide flood insurance. Later D'addetta admitted he never got any elevation certificates for the policy placed through Sinclair, but flood insurance had been procured for the clubhouse previously by V.F. McNeil.
So presumably this necessary requirement had been met in the past. The court asked if he knew he needed these certificates for the outbuildings. Interestingly and seemingly at odds with his earlier testimony, D'addetta said: " I did not know that. Additionally there are elevation certificates on file" --query for each outbuilding, whose file, not the prospective insurer's? Plaintiff's counsel inquired on this matter and D'addetta said Sinclair or his agency never asked him for elevation certificates--not surprising if there was no agreement for Sinclair to procure insurance for the outbuildings. D'addetta did testify three of the outbuildings (or two since it is somewhat confusing) had the same elevation as the clubhouse. But would not an insurer want elevation certificates for all the outbuildings not just three and would it not want more than off-hand speculation about actual elevation? But, as noted, Sinclair never requested such certificates and they were apparently not otherwise provided even if they were buried in some club file or drawer. More to the point would not this have alerted a prospective insured that there was not to be flood coverage for the outbuildings since D'addetta knew such certificates are generally required by the insurer?--to ask the question seems to provide the answer.
In this case it would seem clear that D'addetta knew, and it was, in fact the case, that an elevation certificate was required if the outbuildings were to be insured. In a March 8, 2006 letter (Ex. A) from Mr. Sturgess of V.F. McNeil to Mr. D'addetta, Sturgess gives estimates for procuring flood insurance for two outbuildings, the pro-shop and the apartment building. The letter in the last sentence of the third paragraph says: " If these coverages are desired (i.e. for flood insurance)? Please furnish an elevation certificate on the pro-shop so I can start that process there is a 30 day minimum waiting period from when the application is sent to NFIP." (National Flood Insurance Program). If Sturgess is right, and no one said he was wrong at trial, given the thirty-day waiting period, D'addetta would have known the policy secured by Sinclair which commenced 4/6/06 would not have provided flood insurance for the out buildings. Even though the NFIP policy was cancelled (see Exhibit E) because of the procurement of flood insurance by Mr. Sinclair for the clubhouse the Sturgess letter underlines the fact that any insurer would require an elevation certificate to provide flood insurance.
Another matter relevant to the issue before the court concerning contract formation is the fact brought out at trial, that on May 18, 2006, over a month after coverage on the policy procured by Sinclair began, D'addetta faxed to Cindy Lady, the Account Executive at Sinclair, two documents, Exhibit A and H. Exhibit A is the letter D'addetta received from Sturgess of V.F. McNeil which is dated March 8, 2006 and in one of its paragraphs provides quotes for flood insurance on two of the out buildings. Exhibit H is a document D'addetta said that he received from V.F. McNeil regarding flood insurance under the National Flood Insurance Program. It indicates that under that program the main clubhouse/building is covered and also indicates that for the period of March 24, 2005 to March 24, 2006 Lloyd's Underwriters was offering " $2,500,000 Excess flood coverage on Main Clubhouse building over $500,000 underlying flood": The premiums for each of these coverage is blacked out--D'addetta said by him or the business office manager of the club. The V.F. McNeil document also recommends increasing the excess flood coverage to $3,323,755--again on the main clubhouse. Why would he send these documents to Sinclair? If anything it confirmed the flood insurance policy procured by Sinclair only covered the clubhouse and that outbuilding coverage was a separate issue. Interestingly, Ms. Lady understood the distinction since within minutes of D'addetta's email she sent him a quote and declaration page of the Sinclair policy that indicated a total insured value of $3,750,000--greater than the coverage limits referred to in Exhibit A or H for the main clubhouse--why else would she respond in this way to the D'addetta email and its attachments.
Finally, exhibit F is a correspondence from Ms. Lady informing D'addetta she was sending him the flood policy. It is dated May 12, 2006 and it informs Mr. D'addetta that if he had any questions or wished to make any changes in the policy issued by the underwriter at Lloyd's he should call her--the Lloyd's policy renewal term began 4/4/06 according to the letter. D'addetta said he must have received the letter but still contended he never got the " fall" policy--whatever that means. Why would Ms. Lady misrepresent what she was doing or sending to D'addetta?--to make sure there would be a defense for a claim against her employer for a once in a century storm that was to occur several years hence?
Finally on this issue, the court has reviewed the case law cited by the plaintiff. It does not persuade the court that a breach of contract claim has been established. In Erikson Metals Corporation v. McManus [ 2008 WL 1734880, Gillegang, J.). In Erickson it must be noted that a motion to strike was before the court not a motion for summary judgment or an opinion written after a trial on the merits. In Erikson the complaint alleged that the plaintiff retained Mr. McManus as its insurance agent " to procure proper and adequate insurance for its business including the insurance coverage it had prior to . . . August 31, 2003. A loss was suffered and the plaintiff's claim to the insurance company was denied on the grounds that the policy did not cover the loss. The court denied the motion to strike the breach of contract claim against the agent saying the breach of contract claim was sufficiently alleged.
In so ruling the court in Erickson said: " Construing the allegations in the light most favorable to the plaintiff, an action for breach of contract is sufficiently alleged. The plaintiff alleges that it retained the defendants to procure insurance that was the same as it had in force at the time that the defendants were engaged. That insurance would have included coverage with no pollution exclusion or co-insurance clause since the plaintiff alleges those limitations were not included in its prior policies. Counts one and two allege specific requests by the plaintiff for the defendants to obtain a particular result; namely, the procurement for the plaintiff of the same insurance coverages that it had immediately prior to retaining the defendants. Accordingly, the breach of contract claims are sufficiently alleged."
Also see Allied Sprinkler & Mechanical Systems Inc. et al. v. Montpelier Insurance Company et al. (2012 WL 3264242, Roche, J.), which relied on Erickson and refused to strike a breach of contract count which alleged the plaintiff approached the agent to secure a policy providing the same coverage it had had for the past two years. O& G Industries Inc. v. Litchfield Insurance Group Inc. et al. (2013 WL 3871341, Pickard, J.), relies on Erikson and Allied Sprinkler in denying a motion to strike the breach of contract count against the insurance agent. It held the breach of contract court was sufficiently alleged because the plaintiff " alleges a specific request . . . for the (insurance agent) And to obtain a particular result--namely the procurement of an (insurance program) that complied with the insurance limits required by the EPC Agreement" (EPC stands for Engineering Procurement and Construction Agreement.) All of this lead to inadequate coverage for O& G after an explosion at a construction site.
The case now before the court is not the Erickson case or Allied Sprinkler or O& G Industries . The mere fact that Sinclair reviewed the so-called whole package the plaintiff had on its property at his meeting with D'addetta does not mean he agreed to provide flood insurance for the outbuildings. There must be an agreement to do so. The evidence here supports Sinclair's claim that there was only a specific request to provide flood insurance coverage for the clubhouse, greater in amount than was placed on the clubhouse through the V.F. McNeil policy and at half the premium cost that V.F. McNeil said the premium cost was going to increase to on their policy. There was no request and thus no agreement that Sinclair would procure a policy on the outbuildings for flood coverage. It was not even demanded let alone discussed by the plaintiff who had an insurance agent, V.F. McNeil quite able to provide such coverage and recommended it despite the fact that in the past V.F. McNeil, the club's insurer for eighty years had not secured flood insurance coverage for the out buildings because it was not requested. The evidence established for the court that the club's manager should have known or in fact knew the policy procured by Sinclair did not provide flood insurance coverage for the outbuildings. Even if the plaintiff's assertion that it requested such coverage, which the court finds was not established, to meet the requirements of contract formation, it must be shown that the other party, here the insurance agent Sinclair, agreed to comply with that request--agreement is the sine qua non of contract law. There was no such agreement here under the evidence presented and as the court has discussed.
In DeCresenzo v. CPM Insurance Services Inc. (2007 WL 4733087, Cosgrove, J.) , the court granted a motion to strike a breach of contract count against an insurance agent. The plaintiff informed the defendant insurance agent of anticipated insurance needs including the need for liquor license coverage. The court granted the motion to strike concluding the plaintiff's allegations revealed the agent only " agreed to assist DeCrescenzo with the application process; there is no allegation that (the defendant) guaranteed the provision of insurance or any other specific result." The court finds that in this case it is not even established that Sinclair agreed to procure a flood insurance policy; Sinclair testified the plaintiff would be foolish not to get flood insurance coverage for the outbuildings and he should contact V.F. McNeil who recommended such coverage and at least as to one building quoted a premium. Sinclair's testimony is supported by the evidence as the court has discussed. There was no great incentive to pursue this outbuilding coverage through Sinclair's efforts as there was in the case of the clubhouse where Sinclair was able to achieve more coverage for flood insurance at a significantly lower premium and there was no incentive on Sinclair's part to procure flood insurance for the outbuildings since the reasons for his procurement of flood insurance on the clubhouse were recognized by both parties as premiss advantageous standing alone. Circumstantially then there was no basis to conclude an agreement to procure flood insurance for the outbuildings by Sinclair was a desideratum of either party and the evidence establishes is no such agreement was reached.
Savoy Linen Services Inc. et al. v. USI Insurance Services of Connecticut (2010 WL 936893, Tyma, J.), is similar to DeCrescenzo on which it relies. In part Savoy pointed to the language in DeCrescenzo that said " the essence of the (breach of contract) count is really a negligence claim recast as a breach of contract claim " and" (the) allegations reveal only that (the defendant insurance agent) agreed to assist (the plaintiff) with the insurance application process; there is no allegation that (the defendant) guaranteed the provision of any insurance or any other specific result."
Savoy granted the motion to strike the breach of contract count saying the allegations " are couched in terms of the defendant having committed professional negligence in the procuring of the insurance policy issued to the plaintiffs. The allegations neither expressly allege, nor can they be reasonably construed as alleging, that the defendant promised the plaintiff a specific result in obtaining the insurance."
In this case we are not dealing with a motion to strike but evidence at trial. That evidence, at least for the court, establishes Sinclair did not promise to secure flood coverage for the outbuildings; in fact it rebuts that claim. Why would Sinclair have to since the club had another insurer, V.F. McNeil, whom it had used as an insurer for eighty years that was ready, willing, and able to provide this insurance. There is not an iota of evidence or reason to think for example, that if the plaintiff was even told explicitly that Sinclair procured insurance did not provide flood insurance for the outbuildings it would not have gone through with obtaining the Sinclair brokered policy--why would it since the attraction of that policy was a sizeable reduction in premium for more coverage.
For all of the foregoing reasons the court concludes a breach of contract theory against the defendant has not been established whether it is construed as breach of an express contract or an implied contract or that type of contract which is in part express but relies on the conduct of the parties to imply some of its terms.
D
The defendant filed a motion in limine the day before the trial to preclude the testimony of an insurance expert named Craig Stanovich. The objection was renewed at trial which the court overruled but gave defense counsel a running objection to any and all testimony presented by Mr. Stanovich. The court informed counsel that it is its practice in a court trial to let testimony in and then address in its decision whether it was error to do so especially where the testimony is complicated or its relevance depends on investigating or deciding complicated legal issues. Doing this can also have the advantage of possibly avoiding the need for a retrial if an appellate court were to decide it was error not to permit the testimony.
In any event the court determines that the testimony is irrelevant to any issue in the case and thus agrees with the defense position that it should be excluded from consideration.
First the court should say that Mr. Stanovich's testimony is not being considered irrelevant to the issues before the court because of his lack of expertise. He has an impressive background in the field of insurance coverage coupled with practical knowledge about the industry.
But the court believes, at least from its perspective, that the testimony of Stanovich is confusing. At points he seems to border on suggesting there was some kind of contractual duty or duty based on a request for an agreement to recommend and procure flood insurance for the outbuildings. Thus he stated it was a violation of the standard of care given Sinclair's expertise because: " He's essentially been engaged to provide coverage for a specific risk, flood, and he only provides coverage for a partial risk. So flood is not covered for those outbuildings, and that's what he was engage(d) to do, provide coverage for flood" --see the " specific agreement" language of Shetucket Plumbing Supply Inc. v. SCS Agency Inc., supra . On two occasions Mr. Stanovich stated the premise of his opinion was that " he (Sinclair) was undertaken to get flood insurance for everything, the risk of flood."
For reasons previously stated the testimony of Mr. Sinclair and even that of Mr. D'addetta make clear Sinclair was not " engaged" to secure flood insurance for " everything, " that is the clubhouse and the outbuildings.
His standard of care opinion and testimony is premised on the assumption that there was a specific agreement that Sinclair would procure a policy that provided flood insurance for the outbuildings. This is a restatement of the law and cases that given such a factual scenario an action can be brought in contract and negligence against the insurance agent. The court however, finds however, that there was no contractual agreement. And confusingly enough Mr. Stanovich conceded at another point that the opinions he was offering were not based on a finding that there was any such contract.
At certain points, however, Mr. Stanovich's testimony veers into a standard of care duty having nothing to do with negligence in the procurement of insurance coverage that has been specifically requested but defining a duty based on professional negligence. That is, given the agent's expertise in a certain type of coverage procurement, an agent may have a duty to advise the ensured concerning specialized insurance coverage, Casey v. Phelan Insurance Agency, supra, or gaps in coverage, National Farmers Union Insurance Company v. Soreris River Telephone Mutual Aid Cooperative, supra . In Voss et al. v. Netherlands Insurance Co., supra, the court, as noted " the broker may be liable even in the absence of a specific request for failing to advise or direct the client to obtain additional coverage where . . . (2) there was some interaction regarding a question of coverage with the insured relying on the expertise of the agent." (Emphasis by this court.)
The problem with this line of analysis for this case is that it cannot be incorporated into a breach of contract claim which is the allegation made in the complaint. However, in an excess of caution the court will examine the viability of such a theory as it might apply to this case and its facts.
It is difficult, given the facts of this case to impose on Sinclair a violation of a duty to advise about flood insurance coverage for the outbuildings or to direct the club to secure such insurance. As stated perhaps too many times, V.F. McNeil has been the club's agent to procure insurance for eighty years. Before Sinclair ever " entered the picture, " to use D'addetta's words, the club did not procure flood insurance for the outbuildings although it knew of the concept having insured the clubhouse through V.F. McNeil for millions against the possibility of flood damage. In a March 8, 2006 letter written to D'addetta by V.F. McNeil (Exhibit A) the president of V.F. McNeil reviewed the flood insurance and increased premium for flood insurance on the club house and then said two of the outbuildings--the pro-shop and employee apartment building had no flood insurance. Perhaps on May 18, 2006 D'addetta faxed to Ms. Lady, the Account Supervisor at the Sinclair agency, a document sent to him by V.F. McNeil. The first section is labeled " II Flood Insurance" and the last paragraph of this section, after reviewing flood insurance coverage on the clubhouse says " Based on previous estimates of cost and exposure, the club decided not to cover flood on the Pro-shop (or other buildings). If you would like a new quote, please advise . . ."
Section III " Excess Flood states in the last paragraph: " I recommend increasing limit to $3,323,755 to match building replacement cost in non-flood property policy. Also suggest flood insurance on other buildings. If you would like quotations on other buildings please advise." (Exhibit H.)
The exhibit was from V.F. McNeil to D'addetta, its contents made clear that the club could get flood insurance coverage for the outbuildings from V.F. McNeil.
Even if one were to ignore the testimony of Mr. Sinclair that he told Mr. D'addetta the club would be foolish not to procure flood insurance for the outbuildings and they should secure it through V.F. McNeil--testimony which D'addetta did not contradict on direct, cross or rebuttal--the fact remains, how can it be said Sinclair had a duty to advise and direct procurement of flood insurance on the outbuildings in 2006; 2007, 2008, 2009, 2010, and 2011. The club had, had a long-term insurance relationship with V.F. McNeil, that agency had already advised the procurement of such insurance and the club's failure to do so was part of an ongoing decision, before Sinclair " entered the picture" to not get this coverage. Also Sinclair was aware of the contents of Exhibit A and knew V.F. McNeil had looked into flood insurance coverage for the out buildings.
In any event we are not dealing with a situation that would be presented by a highly experienced insurance agent with expertise about coverages for various perils dealing with a poorly informed party who had no real appreciation of the risks involved by not insuring for a peril or even an awareness of a peril. At the point D'addetta approached Sinclair, D'addetta the club were well aware of the peril flooding presented having insured its clubhouse, and at one point D'addetta testified the elevations of at least some of the outbuilding were at the same level of the clubhouse which was insured for the flood peril. This does not present the usual scenario relied on to establish a special relationship which would impose a duty on an agent to advise and even direct the insurance customer get a certain coverage even though it was not specifically requested or even referred to in discussions between the agent and the customer who made a general, non-specific request for the procurement of a policy.
There are no other indicia of a special relationship between these parties. As noted V.F. McNeil had been the club's insurer for eighty years. There is no evidence Sinclair had been approached before 2006 to procure insurance or seek advice about coverage by the club or any representative of the club. After Sinclair secured the 2006 policy of flood coverage for the clubhouse at a premium substantially lower than the one quoted by V.F. McNeil there was no contact with Sinclair by the club concerning flood coverage on the clubhouse or any other insurance coverage. In 2012, after Hurricane Irene, the club went to V.F. McNeil to procure flood insurance for six buildings.
Finally, there is the matter of causation. What is basically being advanced here is a theory of professional negligence but apart from the legal prerequisite establishing such negligence recovery requires proof of causation. There is nothing to indicate that even if Sinclair had offered to procure flood insurance coverage for the outbuildings the club would have wanted him to do so. V.F. McNeil was their insurance agent for eighty years and the club explicitly declined this coverage for the outbuildings but got this coverage for the club house. What was the particular inducement that would have gotten the club to provide this coverage for the outbuildings through Sinclair when they had never got it through V.F. McNeil. The reason they turned to Sinclair for flood insurance coverage for the clubhouse was the lower premium for more coverage that he could secure--nothing like this was involved with such coverage for the outbuildings.
In a broader sense causation is a problem since it was the club's own negligent decision not to procure flood insurance for the out buildings that caused its loss. There was nothing about the nature of club's relationship with Sinclair or the club's lack of sophistication or knowledge of the need for flood coverage that would allow the club to transfer the causation burden to Sinclair--simply put the club declined such coverage when working with a trusted agent for eighty years who quoted premiums for it and recommended it and they had such coverage for the clubhouse which was on the same elevation as the clubhouse thus presenting similar flood peril to the out buildings.
The court has previously mentioned the salutary benefits sought to be achieved by requiring a specific request for certain coverage as a prerequisite for recovery against these insurance agents under a contract theory. A professional negligence claim should be fairly strictly construed so as to avoid providing an unmerited device to avoid the policy considerations behind the specific request requirement.
In any event, for all the foregoing reasons, the court believes judgment should enter in favor of the defendant.