Authored by: Joseph Ciollo
Superior Court – Property Insurance – Waiver of Suit Limitation Period
In Buckingham Historical Condominium Association, LLC v. Liberty Mutual Insurance Company, the plaintiff filed an action for breach of contract, breach of the covenant of good faith and fair dealing, violation of the Connecticut Unfair Insurance Practices Act (“CUIPA”) and violation of the Connecticut Unfair Trade Practices Act (“CUTPA”) in connection with a commercial property loss. The defendant filed a motion for summary judgment and argued that the entire action was time barred and further, that the second, third and fourth counts were not viable. The applicable insurance policy required that any suit against the insurer be brought within two years after the date on which the direct physical loss or damage occurred. Although it was undisputed that the action was commenced after the expiration of the two-year statute of limitations, the plaintiff argued that there was a genuine issue of material fact as to whether the defendant waived the two-year statute of limitations since the defendant was continuing to negotiate a resolution and did not deny the claim before the expiration of the contractual time limit. The record included communications from the defendant to the plaintiff encouraging the submission of documentation for the defendant’s review and potential settlement after the expiration of the two-year time limitation, which the Court viewed as creating circumstances from which a fact finder could infer that a waiver of the time limit had occurred. The Court acknowledged that the correspondence, both before and after the expiration of the two-year time limit, indeed reserved the rights on behalf of the defendant and provided that it was not waiving same. Still, according to the Court, despite the reservation of rights, the reference to potential settlement if the plaintiff submitted a new proof of loss eight months after the defendant claimed the limitation for suit had run was confusing and created ambiguity regarding waiver. The Court found there to be a genuine issue of material fact as to whether there had been a waiver of the time limitation to bring suit, and denied the motion for summary judgment on that ground. However, the Court granted the motion as to the second, third and fourth counts, as the plaintiff failed to provide an affidavit or any other evidentiary basis for the Court to conclude there were genuine issues of material fact.
U.S. District Court – Negligence and Connecticut Unfair Insurance Practices Act – Judgment on the Pleadings
In Ramos v. AmGuard Insurance Company, the plaintiff’s residence sustained a fire that resulted in real and personal property damage. The defendant issued payment for the claim in an amount less that what the plaintiff alleged to be owed. The plaintiff filed an action for breach of contract, negligence, violation of the Connecticut Unfair Trade Practices Act (“CUTPA”) and the Connecticut Unfair Insurances Practices Act (“CUIPA”). The defendant filed a motion for judgment on the pleadings as to the second and third counts on the basis that the plaintiff failed to state a claim upon which relief may be granted. The defendant argued that the plaintiff’s negligence claim was based wholly on the alleged breach of contract and that the complaint failed to allege even threadbare recitals of the elements of negligence. In response, the plaintiff urged the Court to resolve a split of authority and find that the economic loss doctrine does not bar tort claims brought by an individual policyholder, thus allowing him to maintain a negligence claim arising from a contract claim against an insurance company. The Court observed that both the District of Connecticut and several Connecticut Superior Courts have recognized negligence claims in cases concerning denial of coverage. However, in the present case the plaintiff did not allege any duty—contractual, statutory, or otherwise—but rather, he asserted that the defendant was negligent in the handling of his claim and that he was harmed by that negligence. Because he failed to allege any duty owed to him by the defendant, the plaintiff failed to sufficiently allege a negligence claim. The Court granted the motion for judgment on the pleadings as to the second count of the complaint. As for the claims brought under CUTPA and CUIPA, the plaintiff’s complaint cited to seven lawsuits alleging that they evidenced the frequency at which the defendant had committed the alleged acts. However, the plaintiff did not set forth factual allegations necessary to assess the similarity between the conduct that he allegedly faced and the conduct by the alleged victims in the other lawsuits cited by the plaintiff. The Court noted that similar claims that might survive in state court have been dismissed in this District based on the required pleading standards. Accordingly, the Court granted the motion for judgment on the pleadings as to the third count of the complaint.
Superior Court – Duty to Defend – Severability Clause
In Liberty Insurance Corp. v. Amenta et al, the plaintiff’s named insured was accused in a separate civil action of sexually and physically abusing Jane Doe and of violating court orders entered for her protection. The named insured’s parents and grandparents were also named as defendants in that civil action. The applicable insurance policy issued by the defendant also insured relatives with whom the named insured lived in the insured property. In an action for declaratory judgment, the plaintiff insurer filed a motion for summary judgment seeking a declaration that it was relieved from providing those relatives with a defense against Jane Doe’s claims that their negligence enabled the abuse of her by the named insured. As for the named insured, the Court found that his actions as described in the underlying complaint did not, as a matter of law, constitute an “occurrence” for purposes of liability coverage. In addition, the named insured’s alleged actions were intentional and constituted sexual molestation and physical and mental abuse, all of which were excluded from coverage. As for the relatives of the named insured, they were alleged to have engaged in negligent, rather than intentional, behavior. Thus, the physical injuries which Jane Doe allegedly sustained were the result of the alleged negligence and carelessness of those defendants. The Court held that alleged actions of those other defendants constituted an “occurrence” as that term is defined in the policy. As for the ultimate issue of whether or not the relatives were owed a defense, the Court noted that the policy contained a severability of interests clause, which is viewed as a recognition by the insurer that it has a separate and distinct obligation to each insured under the policy. Here, the Court found that the insurer’s duty to defend the relatives was not defeated by the exclusion in the policy for conduct “which is expected or intended by the ‘insured’ ”. The Court also noted that the exclusion in the policy of coverage for bodily injury “arising out of sexual molestation, corporal punishment or physical or mental abuse” did not refer to the actor, i.e., the person who is alleged to have engaged in such conduct. Yet, someone had to have committed the excluded acts, which in this case was the named insured. Based on the application of the severability clause, the Court held that the insurer could not deny coverage to certain insureds because another insured has engaged in excluded conduct. The Court rejected the insurer’s argument that the allegations against the relatives “arise out of,” “are connected with,” and “flowed from” the named insured’s intentional sexual molestation and physical abuse. The Court stated that the effect of this argument would be to read the severability clause out of the policy. The plaintiff’s motion for summary judgment was denied as to the relatives.
