CT Property and Casualty Insurance Law Newsletter – October 2023
October 31, 2023
Authored by Joseph R. Ciollo
Superior Court – Connecticut Unfair Trade Practices Act – Home Improvement Act
In Silva et al v. Betolatti, the plaintiffs hired the defendant contractor to perform home improvement services at their property. A dispute arose concerning the lack of progress on the job and the quality of the work done, leading to the plaintiffs terminating the defendant from the job and demanding payment of the cost to repair the improper work and to complete the job per the original contract. Among other claims asserted in the civil action, the plaintiffs claimed that the defendant violated the Connecticut Unfair Trade Practices Act (“CUTPA”) by failing to comply with the written contract requirements of the Connecticut Home Improvement Act (“HIA”). The Connecticut Supreme Court has previously ruled that a failure to comply with these requirements is a per se CUTPA violation. The HIA sets forth several components that must be contained within a valid or enforceable home improvement contract, many of which were absent from the defendant’s contract with the plaintiffs. Following a court trial in which the Court found for the plaintiffs on their breach of contract claim, the Court instructed the plaintiffs’ counsel to file an affidavit of attorney’s fees and thereafter awarded reasonable attorney’s fees pursuant to CUPTA. Even though the plaintiffs also claimed punitive damages under CUPTA, the Court declined to award them. Even though it was determined that the defendant’s work was deficient, unprofessional and incomplete, there was little in the record to indicate an intention on the defendant’s part to cause wanton and malicious injury to the plaintiffs.
U.S. District Court – Duty to Defend – Controlled Substance Exclusion
In Merrimack Mutual Fire Ins. Co. v. Clawson et al, the insurer sought a declaratory judgment that it had no duty to defend or indemnify its insured in connection with an underlying wrongful death action. In the underlying action, a decedent’s estate alleged that Merrimack Mutual’s insured provided illegal drugs to the decedent at the insured family residence, which she consumed. The decedent subsequently suffered medical distress and required medical attention. The insured, however, failed to seek medical attention for the decedent, despite knowing that she was in distress. Merrimack Mutual filed a motion for summary judgment concerning the duty to defend. Merrimack Mutual argued that coverage was barred under its policy due to the Controlled Substances exclusion, which provided that it had no duty to defend its insured in suits for damages because of “‘[b]odily injury’ or ‘property damage’ arising out of the use, sale, manufacture, delivery, transfer or possession by any person of a Controlled Substance ….” The Court found that the decedent’s injuries, as alleged in the underlying complaint, clearly arose out of her use of a controlled substance. The insured argued that, while the Controlled Substances exclusion may apply to certain allegations in the underlying complaint, the complaint contained additional factual allegations that are independent of, and can be separated from, the allegations regarding drug use and consumption, such as the allegations that the decedent’s death was caused by the insured’s negligent failure to seek medical assistance when the decedent was in distress. The Court was unpersuaded and found, based on the specific facts alleged in the underlying complaint, that the decedent’s death, while proximately caused in part by the insured’s failure to seek timely medical assistance, clearly “arose out of” her drug use, thus fell under the Controlled Substances exclusion. The Court also declined to follow case law from outside Connecticut in which a court had observed that “fail[ure] to request emergency medical assistance” constituted a “potential separate and independent cause of [the decedent]’s death.” The Court instead opted to follow controlling Connecticut case law, where it is “well settled that an injury need not be ‘proximately caused’ by an act or occurrence in order to arise out of such an act or occurrence within the meaning of an insurance” exclusion and that “[i]t is sufficient to show more broadly that an accident or injury ‘was connected with,’ ‘had its origins in,’ ‘grew out of,’ ‘flowed from,’ or ‘was incident to’ an…occurrence.” The Court granted Merrimack Mutual’s motion for summary judgment.
Superior Court – Uninsured Motorist Coverage – Rental Vehicle
In Balado-Aponte et al v. Family Cycle Center, Inc et al, the plaintiff, Rey Balado-Aponte, rented a vehicle owned by defendants CAMRAC, LLC and/or Ean Holdings (commonly known as “Enterprise”). The co-defendant motorists got into an accident and their vehicles in turn struck a parked vehicle rented by Balado-Aponte, who along the co-plaintiff, Carlos Negron, was seated in the rental vehicle and claimed injuries from the collision. At the time of the accident, Balado-Aponte had liability insurance from a policy issued in Pennsylvania, but no Uninsured Motorist (“UM”) or Underinsured Motorist (“UIM”) coverage. Negron had no insurance. The plaintiffs added Enterprise to the pending lawsuit and asserted claims for UM coverage. Enterprise moved for summary judgment and argued that it was not required to provide UM coverage to the plaintiffs. While the plaintiffs did not dispute that the rental contract maked clear that Enterprise did not provide financial responsibility or insurance coverage to the renter, passengers, or third parties, nor did they dispute that Balado-Aponte declined to purchase UM coverage, they argued that Enterprise cannot deny UM coverage to renters. The plaintiffs asserted that the applicable statutes and regulations require Enterprise to have coverage for all occupants of their vehicles and that Enterprise is prohibited from declining to cover the plaintiffs by law and by public policy. The Court undertook a detailed analysis of Connecticut statutes, regulations and past appellate decisions to determine the extent of Enterprise’s obligations, if any, under the facts of the case. Critical to the court’s analysis were the facts that Enterprise excluded liability coverage for the vehicle and gave Balado-Aponte an opportunity to purchase coverage, which he declined, and the vehicle was not covered by bodily injury liability coverage while in the control of Balado-Aponte. As such, the occupants of the rental vehicle were not entitled to coverage under Enterprise’s UM coverage. The Court recognized that there is a strong public policy of awarding UM coverage, but observed that Connecticut courts have found that it is not required in every situation. The Court granted Enterprise’s motion for summary judgment.