Opinion
No. CV99-0065632S
May 6, 2003
MEMORANDUM OF DECISION
This matter involves a 2002 effort to amend a 1999 complaint to include a CUTPA/CUIPA count at a time near trial and arguably beyond the statute of limitations. It is said that defendant life insurer wrongfully refused to honor the policy upon the death of plaintiff's decedent in a context where the insured applicant admittedly disclosed her asthma condition to the sales representative, but where the underwriting department subsequently presented for her signature an "application" absent such detail. Plaintiff's alleged "nondisclosure" formed the basis for the carrier's refusal to pay the coverage.
On November 1, 2002, the plaintiff sought to amend her 1999 complaint to add two additional counts, namely Count Three and Count Four. Count Three of the amended complaint alleges that a member of Prudential's underwriting staff committed negligence and/or intentional misrepresentation when he or she prepared McElhaney's application for life insurance for her signature, but failed to include any information regarding McElhaney's asthma. The court allowed the new third count on January 7, 2003, as the allegations contained therein were basically within the factual parameters of the original complaint.
This court will hold that the plaintiff's CUTPA/CUIPA count cannot come in because our case law in the CUIPA realm requires evidence of a "general business practice." In turn, CUIPA would thus open both parties to explorations, investigations and discovery work far outside the prior fact boundaries. Where judicial hospitality has been extended belatedly to new theories of liability, this has occurred only within the rough factual setting originally called into play.
FACTS
In February 1999, plaintiff Bobby Ann Thompson, filed a two-count complaint against the defendants, Prudential Insurance Company of America ("Prudential"), and one of its salespersons, Raymond Quiles, sounding in breach of contract and negligence, respectively. It is said that in the autumn of 1997, Quiles, a sales representative of Prudential, sold the plaintiff's mother, Rosie McElhaney, a $100,000 life insurance policy, which named plaintiff-daughter Thompson as beneficiary, for an annual premium of $969.00. In September 1998, McElhaney died, with premiums paid up to date.
Plaintiff's complaint did not state exactly when McElhaney's application for life insurance was processed, but did claim that "[o]n August 27, 1997, in consideration of an annual premium of $969.00, the defendant Prudential issued and delivered to [McElhaney] its policy of insurance . . ." In contrast, plaintiff's memorandum of law in support of her request to amend, dated January 2, 2003, stated that "[o]n October 21, 1997, the agent delivered the completed and printed application and policy forms . . ." and that McElhaney completed "an in-home application process through the Defendant's employee-agent, Raymond Quiles . . . on September 2, 1997."
Therefore, due to this discrepancy in the pleadings, and the fact that the documents submitted by the defendant were no more illuminating in this regard than those submitted by the plaintiff, this court was unable to determine the exact dates upon which McElhaney 1) filled out her application for the life insurance policy and 2) received a finalized copy of her life insurance policy in exchange for her annual premium payment of $960.00. Accordingly, this court side-stepped these irrelevant discrepancies with the autumnal reference.
Plaintiff requested the policy limits and the carrier refused in December 1998, stating that McElhaney had materially misrepresented the state of her health on the application form, which does not contain the asthma information. Both complaints assert that this constitutes a breach of contract, and contend that McElhaney told Quiles that she had been diagnosed with asthma and that she had been taking prescription medication for this disorder, yet Quiles "negligently or intentionally failed to include or to review said information in the application for insurance which he prepared on behalf of [McElhaney]." Further information obtained in a discovery deposition added to the detail of the same transaction and this court allowed a new Count Three, naming the underwriting section. (Apparently, it was discussed at deposition of Quiles that plaintiff's decedent did report the asthma facts and Quiles testified that he reported it to "underwriting" and that said department then prepared the "application" which did not contain decedent's disclosure.)
DISCUSSION
In Count Four of the plaintiff's proffered 2002 amendment, she claims that Prudential violated General Statutes § 38a-816, the Connecticut Unfair Insurance Practices Act ("CUIPA") and § 42-110b, the Connecticut Unfair Trade Practices Act ("CUTPA"). Plaintiff maintains that the court should authorize her to add these claims because they "relate back" to the same negligent and/or intentional conduct committed by Prudential and therefore should not be deemed to invoke new factual considerations. The carrier's objection to the amendment is that Count Four alleges 9 separate causes of action (a rather hyperbolic reference to the several sub-paragraphs of the CUIPA statute plaintiff invoked. See fn6, infra.) that do not "relate back." Additionally, it further claims, more importantly in this court's view, that it will be prejudiced because it will be forced to "gather different facts, evidence and witnesses [in order to] defend [those] claims." It is this notion that this court has found dispositive.
In addition, the plaintiff claims that Prudential has continued to breach its "contractual duty of fair claim investigation and settlement practices," by failing to pay. Plaintiff contends that this behavior constitutes a continuing course of wrongful conduct which operates to toll the statute of limitations.
In several instances, our Supreme Court has held that "a statute of limitations may be tolled under the . . . continuing course of conduct doctrine, thereby allowing a plaintiff to commence his or her lawsuit at a later date." (Internal quotation marks omitted.) Sherwood v. Danbury Hospital, 252 Conn. 193, 202-03 (2000); see, e.g., Blanchette v. Barrett, 229 Conn. 256, 265 (1994). In accordance with this doctrine, "[w]hen the wrong sued upon consists of a continuing course of conduct, the statute does not begin to run until that course of conduct is completed." (Internal quotation marks omitted.) Doe v. State, 216 Conn. 85, 92 (1990). "The continuing course of conduct doctrine reflects the policy that, during an ongoing relationship, lawsuits are premature because specific tortious acts or omissions may be difficult to identify and may yet be remedied." Blanchette v. Barrett, supra, 229 Conn. 276.
Our Supreme court has also stated that "in order [t]o support a finding of a continuing course of conduct that may toll the statute of limitations there must be evidence of the breach of a duty that remained in existence after commission of the original wrong related thereto. That duty must not have terminated prior to commencement of the period allowed for bringing an action for such a wrong." (Internal quotation marks omitted.) Fichera v. Mine Hill Corp., 207 Conn. 204, 209-10 (1998).
Furthermore, in Sherwood v. Danbury Hospital, supra, the Supreme Court noted the following:
[Our courts] have upheld a finding that a duty continued to exist after the cessation of the act or omission relied upon [where there is] evidence of either a special relationship between the parties giving rise to such a continuing duty or some later wrongful conduct of a defendant related to the prior act. Fichera v. Mine Hill Corp., supra, 207 Conn. 209-10 (no evidence to support continuing duty on part of defendant after property sold); see, e.g., Connell v. Colwell, supra, 214 Conn. 242 (improper reliance on theory [by plaintiff in medical malpractice action]); Beckenstein v. Potter Carrier, Inc., 191 Conn. 150, 464 A.2d 18 (1983) (no continuing duty on defendant's part after completion of roof installation); Prokolkin v. General Motors Corp., [ 170 Conn. 289, 299, 365 A.2d 1180 (1976)] (continuing course of conduct theory inappropriate in strict product liability action); Handler v. Remington Arms Co., supra, 144 Conn. 316 (applying continuing course of conduct doctrine to toll statute of limitations on basis of continuing duty to warn of defective cartridge by manufacturer); Vilcinskas v. Sears, Roebuck Co., [ 144 Conn. 170, 174, 127 A.2d 814 (1956)] (continuing course of conduct inapplicable where act completed by sale of air rifle).
Sherwood v. Danbury Hospital, supra, 252 Conn. 203-04 (internal quotation marks omitted).
With the foregoing parameters in mind, this court considers the facts of this case and whether the plaintiff's use of the continuing course of conduct doctrine is warranted.
The plaintiff claims that Prudential breached its contractual duty when it denied her claim for benefits and then proceeded to accuse her mother of materially misrepresenting the state of her health on the application for the life insurance policy, even after it was later discovered that Prudential's own agents may have negligently or intentionally omitted the pertinent information. In addition, the plaintiff claims that Prudential wrongfully "[compelled] this litigation without an offer of a reasonable and fair settlement" (Plaintiff's Memorandum of Law, ¶ 9), conduct which was ongoing at least through September of 2002. Thus the facts as pleaded appear to satisfy the first two requirements of the doctrine. (The first prong of the doctrine "evidence of a breach of duty that remained in existence after the commission of the original wrong" — might be deemed satisfied by the fact that Prudential breached its contract with the plaintiff when they denied coverage under McElhaney's policy and have steadfastly refused to pay benefits to the plaintiff since that initial breach. The second prong of the doctrine — "[t]hat duty must not have terminated prior to the commencement of the period allowed for bringing an action for such a wrong" — might also be deemed met by Prudential's continual denial of coverage and failure to offer a reasonable settlement at least through September of 2002.)
In considering whether it could be said that the parties had a "special relationship" that would give rise to an ongoing duty, the court notes that while the plaintiff clearly had a contractual relationship with the defendant, she does not claim to have had any other sort of "special relationship" with Prudential, nor do the facts seem to compel such an assumption. Therefore, the plaintiff has failed to satisfy this requirement of the doctrine because a "contractual relationship" does not give rise to an ongoing legal duty and our Supreme Court has so held. Fichera v. Mine Hill Corporation, supra, 207 Conn. 210.
Lastly, the plaintiff argued that Prudential failed to "offer a reasonable and fair settlement [to her] as recently as September 2002." (Plaintiff's Memorandum of Law, ¶ 9.) Presumably, this assertion was made in an attempt to satisfy that portion of the doctrine wherein the plaintiff must show that the defendant committed "some later wrongful conduct . . . related to the [defendant's initial wrong]." Sherwood v. Danbury Hospital, supra, 252 Conn. 203. Nonetheless, while the court recognizes that the defendant's post-denial failure to attempt a reasonable settlement may violate a statutory command to do so under 38a-318 (6), and thus remain in line with continuing course of conduct restrictions, this particular "violation" does not enjoy a clean pathway to a CUIPA/CUTPA count, as the text of this decision relates. Case law requires, in this context, a true pattern of unfair settlement practices and that requirement puts this claim afoul of the threshold doctrine that a newly amended count arise from the same set of facts.
The defendant also contends that the plaintiff's proposed amendment to include Count Four is untimely and barred by a statute of limitations contained within the very statute the new count would invoke. The defendant asserts that the statutory claims advanced in Count Four are governed by General Statutes § 42-110g (f), which limits the time period for filing a CUTPA claim to "not . . . more than three years after the occurrence of a violation of this chapter." Moreover, the defendant claims that the "occurrence," which allegedly gave rise to the plaintiff's initial claim, took place in September of 1997, when McElhaney purchased the life insurance policy from Quiles and Quiles allegedly failed to include pertinent health information on the application for that insurance.
It is true that our Supreme Court has indicated that "[s]ection 38a-816 (6) prohibits unfair claim settlement practices"; Heyman Associates No. 1 v. Insurance Co. of Pennsylvania, 231 Conn. 756, 796 (1995); however, it has also held that "[u]nder this section of CUIPA, the claimant must allege and prove facts sufficient to show that the insurer was [c]ommitting or performing [certain specified acts] with such frequency as to indicate a general business practice . . ." (Emphasis added; internal quotation marks omitted.) Id., 796. Additionally, the Supreme Court has noted that "[ i] n requiring proof [ of] . . . 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." (Emphasis added; internal quotation marks omitted.) Lees v. Middlesex Ins. Co., 229 Conn. 842, 849 (1994). Moreover, "[i]n a CUTPA or CUIPA claim, the insurer's liability is ordinarily based on its conduct in settling or failing to settle the insured's claim and on its claims settlement policies in general." (Emphasis added; internal quotation marks omitted.) Heyman Associates No. 1 v. Insurance Co. of Pennsylvania, supra, 231 Conn. 790.
Accordingly, our Supreme Court has concluded "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)." (Emphasis added.) Lees v. Middlesex Ins. Co., supra. 229 Conn. 849.
It has also been said that "a CUTPA claim based on an alleged unfair claim settlement practice prohibited by 38a-816 (6) [requires] 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., supra, 229 Conn. 850.
Proposed Count Four purports to list ways in which Prudential allegedly violated the law in handling this plaintiff's claim, closely tracking § 38a-816 (6) while also stating Prudential has a history of handling similar claims in an unfair manner. One cannot escape the conclusion that, as long as CUIPA claims require proof of facts outside this policyholder's experience with the sole policy at issue, admission to the pleadings at this stage would violate Sharp v. Mitchell, 209 Conn. 59 (1998) and the several cases cited therein. Indeed, the new count sought would dwarf the factual arena of the matter as it has existed for three years, and do so scant weeks before trial.
Count Four of the plaintiff's amended complaint states in relevant part that Prudential has "violated the Connecticut Unfair Insurance Practices Act as defined by Section 38a-816 in one or more of the following ways:
(a) In that it misrepresented pertinent facts or insurance policy provisions relating to coverages at issue;
(b) failed to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;
(c) refused to pay claims without conducting a reasonable investigation based upon all available information;
(d) not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear through the discovery process or otherwise;
(e) compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds.
(f) attempting to settle a claim for less than the amount to which a reasonable person would have believed he/she was entitled by reference to written or printed advertising material accompanying or made part of an application;
(g) attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of the insured;
(h) making false or fraudulent statements or representations on or relevant to an application for an insurance policy for the purpose of obtaining a fee, concession, money or other benefit from any insurer, producer or individual.
(Plaintiff's Proposed Amended Complaint, ¶ 4-5, Count Four, Subsection 29.)
"Upon information and belief, the Defendant [Prudential] is or has committed or performed the aforementioned actions with such frequency as to indicate a general business practice relating to the disposition of insurance proceeds under similar circumstances." (Plaintiff's Amended Complaint, ¶ 5, Subsection 30.)
This court has not made the statute of limitations/continuing course of conduct arguments the center of this decision's rationale. It is the sense of this court that concerns over whether new allegations or alternate theories of recovery go back to a point before a statute has run are not the entire raison d'etre for the doctrines which have emerged. The case law doctrine only appears to be centered upon statute of limitation concerns and machinations. This is understandable, of course, for in instances where no statute problem hovered, no barrier exists; plaintiff could file a brand new suit. But Sharp, infra, makes clear that new facts are the devil residing in these details. Indeed, as noted here, the new facts, regarding Prudential practices, present a bigger undertaking by far, for both parties, than the base case. It is that problem, the exponential explosion of fact boundaries, which seems to lie in the shadows but which is at the true center of all "relation back" decisions.
Of course, the footnoted discussion also notes that the continuing course of conduct argument may not be sound here, for lack of a continuing duty after the wrong. There is a duty in the post-wrong period, to adjust claims fairly, but that statute's invocation, oddly it seems, requires that a wrongdoer practice such conduct regularly. Thus, the CUIPA statute may giveth (on continuing duty) and taketh away (on requiring multiple occurrences).
Neither party has addressed the question as to whether the limitation can ever run on an eleventh hour CUIPA claim citing an ongoing, unreasonable settlement posture. This court does not therefore, address it, but in an obiter dicta moment, speculates that even this argument would fall to the general pattern requirements of the CUIPA case law.
For these reasons, Count Four cannot be allowed at this time, less than a month before trial, and the defendant's objection is sustained.
Nadeau, J.