Opinion
No. UWY-CV-08-5010277-S X02
April 3, 2009
MEMORANDUM OF DECISION RE DEFENDANT TRAVELERS INDEMNITY COMPANY'S MOTION TO STRIKE
I. BACKGROUND
This action arises out of the plaintiff's claim under its commercial insurance policy with defendant Travelers Indemnity Company (hereinafter referred to as "Travelers") for property damage to its office condominium building at 760 Summer Street, Stamford, Connecticut. On February 26, 2007, a pipe allegedly burst in the plaintiff's building causing water damage to multiple vacant condominium office units. Thereafter, the plaintiff made a claim to Travelers for property damage. After a series of inspections, Travelers ultimately denied the plaintiff's claim on February 13, 2008. This action has been initiated against both Travelers and Todd Pelletier, a Travelers employee, in his individual capacity.
In its Second Amended Complaint, the plaintiff has alleged claims against Travelers in the nature of: breach of contract (First Count), breach of implied duty of good faith and fair dealing (Second Count), breach of fiduciary duty (Third Count), and violations of the Connecticut Unfair Insurance Practices Act (hereinafter referred to as "CUIPA"), and the Connecticut Unfair Trade Practices Act (hereinafter referred to as "CUTPA") (Fifth Count). The Fourth Count is a claim against Todd Pelletier for tortious interference with business relations. Travelers has moved to strike the Third Count and the Fifth Count of the Complaint on the grounds that they are legally insufficient. Plaintiff has objected to the motion. The parties argued the matter before the Court on March 30, 2009, at which time the Court reserved decision on the matter.
II. DISCUSSION
"The purpose of a motion to strike is to contest . . . the legal sufficiency of the allegations of any complaint . . . to state a claim upon which relief can be granted." Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 498, 815 A.2d 1188 (2003). "A motion to strike challenges the legal sufficiency of a pleading, and, consequently, requires no factual findings by the trial court." Rizzuto v. Davidson Ladders, Inc., 280 Conn. 225, 229, 905 A.26 1165 (2006). The role of the trial court is to examine the complaint, construed in favor of the plaintiff, to determine whether the pleading party has stated a legally sufficient cause of action." Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 378, 698 A.2d 859 (1997). A court may not look beyond the pleadings for facts not alleged therein. Cavallo v. Derby Savings Bank, 188 Conn. 281, 285-86, 449 A.2d 986 (1982). "A motion to strike admits all facts well pleaded; it does not admit legal conclusions or the truth or accuracy of opinions stated in the pleadings." Faulkner v. United Technologies Corp., 240 Conn. 576, 588, 693 A.2d 293 (1997). A complaint that asserts conclusions of law, absent sufficient facts to support them is subject to a motion to strike. Mora v. Aetna Life Casualty Ins. Co., 13 Conn.App. 208, 211, 535 A.2d 390 (1988).
A. Fiduciary Duty
Travelers argues that it does not owe the plaintiff a fiduciary duty. It states that Connecticut does not recognize a fiduciary duty between an insurer and an insured. "It is well settled that a fiduciary or confidential relationship is characterized by a unique degree of trust and confidence between the parties, one of whom has superior knowledge, skill or expertise and is under a duty to represent the interests of the other." Macomber v. Travelers Property Casualty Corp., 261 Conn. 620, 640, 804 A.2d 180 (2002). "Although [our Supreme Court] has refrained from defining a fiduciary relationship in precise detail and in such a manner as to exclude new situations . . . [it] ha[s] recognized that not all business relationships implicate the duty of a fiduciary." Id. "In particular instances, certain relationships, as a matter of law, do not impose upon either party the duty of a fiduciary." Hi-Ho Tower, Inc. v. Com-Tronics, Inc., 255 Conn. 20, 38, 761 A.2d 1268 (2000).
"Jurisdictions are split on the issue of whether an insurer owes a fiduciary duty to its insured; our case law is silent on this issue except for a single pronouncement in Harlach v. Metropolitan Property Liability Ins. Co., 221 Conn. 185, 190, 602 A.2d 1007 (1992), where we characterized the relationship between the insurer and insured as "commercial", at least in the context of purchasing a policy." Macomber, supra, at 641. Thus, in Macomber the Supreme Court held that there was no fiduciary relationship between an insurer and a third party claimant because such a duty would interfere with the insurer's ability to act primarily for the benefit of its insured. In Macomber the Supreme Court did not state that there can never be a fiduciary relationship between an insurer and an insured. It is noteworthy that Justice Borden, in his majority opinion, chose the description that the relationship had previously been defined as "commercial," at least in the context of purchasing insurance. (Italics added). In Macomber, the Supreme Court went on to state: "Even if we were to assume, however, that the insurer does act in a fiduciary capacity with respect to its insured, that fact precludes an inference of a fiduciary duty existing between the insurer and a third party claimant . . ." Supra at 641-42. Thus, the Supreme Court appears to have acknowledged the possibility that a fiduciary relationship could exist between an insurer and its insured in the administration of a policy. This case involves a claim that the insurer breached its fiduciary duty to its insured in the administration of its policy.
Plaintiff argues that the issue of a fiduciary duty in this factual situation raises a matter of first impression in Connecticut. Plaintiff suggests that, since the Supreme Court has not decided that the situation can never create a fiduciary relationship, that the principles of a fiduciary relationship must be applied herein. Further, plaintiff cites numerous Superior Court decisions to suggest that the determination of a fiduciary relationship is one of fact for the jury or fact finder to determine. It argues that "[w]hen the facts provable in the complaint [will] support a cause of action, the Motion to Strike must be denied". Sullivan v. Lake Compounce Theme Park, Inc., 277 Conn. 113, 889 A.2d 810 (2006).
"In the seminal cases in which this court has recognized the existence of a fiduciary relationship, the fiduciary was either in a dominant position, thereby creating a relationship of dependency, or was under a specific duty to act for the benefit of another." Hi-Ho Tower, Inc., supra, at 38. Thus, in Dunham v. Dunham, 204 Conn. 303, 323, 528 A.2d 1123 (1987), overruled on other grounds, where an attorney had given both legal and non-legal advice to his younger brother, the Supreme Court held than an instruction to the jury on the basis of breach of fiduciary duty was appropriate because the defendant stood in a position of trust and confidence, and the plaintiff relied on him for both legal and non-legal advice. Further, in Konover Development Corporation v. Zeller, 228 Conn 206, 218, 635 A.2d 798 (1994), the Supreme Court recognized that general and limited partners are "bound in a fiduciary relationship" and, as such, must act as trustees and represent the interests of each other.
In Hi-Ho Tower, Inc., Supra, at 38-43, the Supreme Court noted that in cases in which the Court had, as a matter of law, refused to recognize a fiduciary relationship, the parties were either dealing at arm's length, thereby lacking a relationship of dominance and dependence, or the parties were not engaged in a relationship of special trust and confidence. In Hemingway v. Coleman, 49 Conn. 390, 391 (1881), the Supreme Court declined to find a fiduciary relationship where two friends had previously worked together and the defendant knowingly offered the plaintiff one-half of the value of the business. The Court opined, in that opinion, that "(The defendant) had not by being a friend become the guardian of (the plaintiff's) interests in any such sense as to impose upon him a legal duty to sacrifice his own to theirs." Id. at 392. "The law will imply (fiduciary responsibilities) only where one party to a relationship is unable to fully protect its interests (or where one party has a high degree of control over the property or subject matter of another) and the unprotected party has placed trust and confidence in the other." Hi-Ho Tower, Inc., supra, at 41. Thus, in Hi-Ho Tower, Inc., the Supreme Court did not find a fiduciary relationship where the parties were business entities that engaged in an arm's length transaction and there was no evidence that the plaintiff was unable to protect its interests. "The fact that one business person trusts another and relies on (the person) to perform (its obligations) does not rise to the level of a confidential relationship for purposes of establishing a fiduciary duty." Hi-Ho Tower, Inc., supra, at 41.
In Paragraph 16 of its Amended Complaint plaintiff alleges that "the plaintiff and the defendant had a special relationship resulting in a justifiable trust being confided in Travelers by the plaintiff resulting in Travelers having superiority and influence as to fully, accurately and honestly implement the terms, coverage and definitions of the policy." Paragraph 17 alleges that the "defendant owed the plaintiff a fiduciary duty of care and loyalty based on the special relationship outlined in paragraph 16 above, which required that the defendant represent the plaintiff's interests by paying for proper repairs to the property on a timely basis." Further, in Paragraph 18, plaintiff alleges that the "plaintiff was dependent on Travelers' duty to act on its behalf pursuant to the contract between the parties."
The allegations are sufficient, if proven, to justify a judgment in favor of the plaintiff. The court need not come to any factual conclusions as "all well-pleaded facts and those facts necessarily implied from the allegations are taken as admitted." Violano v. Fernandez, 280 Conn. 310, 318, 907 A.2d 1188 (2006). The Court must look to the facts with a broad and realistic mind and construe the complaint in the manner most favorable to finding legal sufficiency. Bhinder v. Sun Company, Inc., 263 Conn. 358, 819 A.2d 822 (2003). It will remain for the plaintiff to prove the nature of this "special relationship" in order to meet the requirements of the finding of a fiduciary relationship. Thus, this Court refuses to adopt a standard wherein all actions between an insured and insurer based upon breach of fiduciary duty in the performance and administration of an insurance contract are not allowed in Connecticut. Our Appellate Courts have simply not addressed the subject other than to recognize that there is a split of authority in other jurisdictions. This Court prefers to follow the admonition from our Supreme Court wherein it has "refrained from defining a fiduciary relationship in precise detail and in such a manner as to exclude new situations." Harper v. Adametz, 12 Conn. 218, 225, 113 A.2d 136 (1955). Accordingly, Travelers' Motion To Strike the Third Count is denied.
B. Violations of CUIPA and CUTPA
Connecticut General Statutes Sec. 38a-815 et seq., states, in relevant part, that "No person shall engage in this state in any . . . unfair method of competition or an unfair or deceptive act or practice, in the business of insurance." Unfair methods of competition or deceptive acts and practices, in the business of insurance, include unfair claim settlement practices committed or performed with such frequency as to indicate a general business practice. C.G.S. Sec. 38a-816(6). CUTPA prohibits unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or business. C.G.S. Sec. 42-110b.
Defendant argues that the plaintiff has alleged in the Fifth Count only one incident of Travelers' misconduct. In Mead v. Burns, 199 Conn. 651, 509 A.2d 11 (1986), the Supreme Court held that the alleged improper conduct in the handling of a single insurance claim, without any (evidence) of misconduct in the processing of any other claim, does not rise to the level of a general business practice as required by 38a-816(6). Further, in Lees v. Middlesex Ins. Co., 229 Conn. 842, 643 A.2d 1282 (1994), the Supreme Court held that without a viable cause of action in CUIPA a party did not have a cause of action under CUTPA. Travelers argues that "for a CUTPA/CUIPA claim to survive a motion to strike . . . the majority of superior court decisions have construed [t]he frequently cited cases of Mead and Lees . . . [to] require that claims of unfair settlement practices under CUIPA [show] . . . more than an single act of insurer misconduct . . . [and] that there must be evidence of misconduct by the insurer in the processing of other policyholders' claims in order to rise to the level of a general business practice." Michalek v. Allstate Ins. Co., Superior Court, Judicial District of Hartford at Hartford, Docket No. CV07-5008280 S (January 18, 2008, Elgo, J.).
Plaintiff, however, cites numerous Connecticut Superior Court decisions which allow the allegation of general business practice to withstand a motion to strike. "[G]iven the remedial nature of CUIPA and given that it is to be liberally construed to give effect to the legislature's intent, the court holds that the allegation of a general business practice . . . is sufficient to withstand a motion to strike." Nation v. Allstate Insurance Company, Superior Court, Judicial District of Litchfield at Litchfield, Docket No. CV04-0093456 S (September 7, 2005, Trombley, J.). C.G.S. Sec. 39a-816(6) requires that the plaintiff prove the allegations of a general business practice. "[H]aving that burden, the plaintiff is entitled to conduct discovery as to whether or not the alleged unfair settlement practices of [the insurance company] . . . also occurred with respect to claims submitted by other insureds with similar coverage. Union Street Furniture and Carpet, Inc. v. The Hartford Financial Services Group, Inc., Superior Court, Judicial District of Stamford-Norwalk at Stamford, Docket No. CV04-400464 S (July 19, 2006, Jennings, J.). In the event that, after discovery, there is only proof as it may exist in this one case, the matter may be the subject of a summary judgment motion.
Accordingly, the Court agrees with those Superior Court decisions which have held that a general allegation of a general business practice under CUIPA is sufficient to withstand a Motion to Strike. The Court finds that the allegations in the Second Amended Complaint are sufficient to sustain a cause of action under both CUIPA and CUTPA. Therefore, Travelers' Motion to Strike the Fifth Count is denied.
III. CONCLUSION
Based upon the foregoing reasons, Travelers' Motion to Strike the Third and Fifth Counts of the Plaintiff's Second Amended Complaint is denied.