CT Property and Casualty Insurance Law Newsletter – January 2024
January 31, 2024
Authored by: Joe Ciollo
Superior Court – Duty to Defend – Third-Party Direct Action
In Altschuler v. Utica First Insurance Co., the plaintiff obtained a default judgment against Utica First Insurance Co.’s (“Utica”) insured. The plaintiff’s decedent had suffered a gunshot wound to the head, brain lacerations, skull fractures, and other serious bodily injuries caused by Utica’s insured. Utica denied coverage for the claim and did not provide a defense for its insured in the underlying action. The plaintiff then filed a post-judgment direct action against Utica pursuant to the applicable Connecticut statute, arguing that Utica was liable for the judgment amount plus other damages. The plaintiff filed a motion for summary judgment and argued that Utica could not disclaim its obligation to indemnify its insured after failing to provide a defense. Utica filed a cross-motion for summary judgment and argued that because it had no duty to defend its insured, it therefore had no duty to indemnify. Utica argued that the decedent’s injuries were not the result of an occurrence, as defined in the insurance policy, and further that coverage was barred by an intentional act exclusion. The complaint in the underlying action contained counts for both intentional and negligent conduct of Utica’s insured. The Court observed that the plaintiff’s claims for intentional and negligent conduct were largely based on the same underlying facts, and analyzed previous Connecticut opinions that have addressed similar circumstances. In reviewing the allegations of the underlying complaint in their entirety, the Court explained that it would “strain the bounds of rational comprehension” to find that the insured’s conduct was anything other than intentional. The allegations supported the reasonable inference that the insured intended or expected to cause injury to the decedent, supported a cause of action for an intentional tort as opposed to a negligence tort, and precluded any conclusion that the insured’s alleged actions, and therefore the decedent’s resulting injuries, were an occurrence or accident under the insurance policy. In addition, because the alleged acts underlying the decedent’s injuries were intentional acts, the Count found the policy’s intentional act exclusion to bar coverage. The plaintiff’s motion for summary judgment was denied and Utica’s cross-motion for summary judgment was granted.
U.S. District Court – Motion to Dismiss – Extracontractual Claims
In Five Star Cars, LLC v. Graphic Arts Mutual Insurance Co. et al, the plaintiff, a car dealership, filed suit against its insurers, Graphic Arts Mutual Insurance Co. (“GAMIC”) and Occidental Fire & Casualty Insurance Co. (“Occidental”) in connection with a fire loss which resulted in damage to personal property, business property, and leased real property. The plaintiff disputed the sufficiency of loss payments that had been made by the insurers. The plaintiff filed suit and included claims for breach of contract, breach of the covenant of good faith and fair dealing, “bad faith denial of an insurance claim,” and violation of the Connecticut Unfair Trade Practices Act (“CUTPA”) and the Connecticut Unfair Insurance Practices Act (“CUIPA”). Both insurers moved to dismiss all claims against. The plaintiff’s breach of contract claim against GAMIC was dismissed on the basis that it violated the two-year suit limitations period in the applicable policy. The Court rejected the plaintiff’s argument that the suit limitations period was tolled by a Connecticut Executive Order relating to COVID-19, citing prior decisions in which courts have held the Executive Order to be inapplicable to suit-limitation provisions in private contracts. On this same basis, the Court dismissed the claim against GAMIC for breach of the covenant of good faith and fair dealing. Occidental moved to dismiss the breach of contract claim on the basis that it did not identify the policy at issue, did not allege which coverage parts are implicated by the plaintiff’s claims, and did not identify any policy provisions that were allegedly breached. The Court denied this portion of Occidental’s motion and observed that the plaintiff “just barely” stated a plausible breach of contract claim. The plaintiff’s claims against GAMIC and Occidental for alleged violations of CUIPA / CUTPA were dismissed on the basis that the plaintiff failed to plausibly plead a general business practice, which was required for the CUIPA claim and in turn impacted the derivative CUTPA claim. The prior court decision against those insurers relied upon by the plaintiff for the proposition of general business practices were found to be too dissimilar to be relevant to the present claims.
Superior Court – Motion to Dismiss – Collateral Estoppel and Res Judicata
In Bouazza v. GEICO General Ins. Co., in a prior Underinsured Motorist (“UIM”) action, on the eve of trial, the plaintiff filed a request for leave to add an additional count against GEICO, asserting a claim of bad faith for refusing to pay its available first party coverage amount. The trial court bifurcated the trial, allowing the UIM claim to proceed. The jury returned a verdict in the amount of $2,262,000, which was subsequently reduced to $79,000, the remaining available limits of the UIM policy. Subsequently, the court granted GEICO’s motion to dismiss the remaining bad faith claim, ruling that the litigation privilege provides an absolute immunity from suit, depriving the court of subject matter jurisdiction. That ruling is presently on appeal. The plaintiff then filed the present action. GEICO moved to dismiss this action, asserting that the first count alleging bad faith was barred by the doctrine of issue preclusion and that the second count, alleging negligent infliction of emotional distress, and the third court, alleging intentional infliction of emotional distress, were barred by the doctrine of claim preclusion. The plaintiff did not attack these assertions directly. Rather, she argued that the merits of her bad faith claim were not addressed by the court in the underlying action. Although these arguments did not address the substance of the present motion to dismiss, this court considered them and found them to be unpersuasive. As for the merits of GEICO’s present motion, it could not be disputed that the claim of bad faith was previously raised in the underlying action. The Court observed that the plaintiff was unhappy with the disposition of dismissal of the claim in the prior action and had appealed the court’s decision. The Court observed two possible outcomes of the appeal. First, the plaintiff may win her appeal. In that instance, the plaintiff may continue with her claim of bad faith at the trial court level and may seek to add additional claims of emotional distress at that time. Second, the plaintiff may lose her appeal. In that instance, the plaintiff cannot have a “second bite of the apple” at the trial court level. Since the issue of bad faith was fully litigated by the parties in the underlying action, the Court ruled that it was barred by collateral estoppel, or issue preclusion. The Court also agreed with GEICO’s argument that the two new emotional distress claims were precluded because they were not raised in the initial action. Although the plaintiff did assert that she suffered emotional distress in the underlying action, she did not raise claims for negligent or intentional infliction of emotional distress. These claims could have been brought at the time when bad faith was asserted in the underlying action. For these reasons, the claims were barred by the doctrine of res judicata, or claim preclusion.