Connecticut Property and Casualty Insurance Law Newsletter – July 2023
July 28, 2023
U.S. District Court – Connecticut Unfair Trade Practices Act – Motion to Dismiss In Klaneski v. State Farm Mutual Automobile Insurance Co., the plaintiff was an assignee of the rights of an insured whose vehicle had been damaged after an accident. The plaintiff sued State Farm alleging that the company provided incorrect guidance to the insured regarding the safety of the vehicle after an accident and later failed to pay the full amount owed under the applicable insurance policy. The plaintiff asserted claims under the Federal Trade Commission Act (“FTCA”), the federal mail and wire fraud statutes, the Connecticut Unfair Insurance Practices Act (“CUIPA”). As for the claims under the FTCA and federal mail and wire fraud statutes, the Court granted State Farm’s motion to dismiss on the basis that the plaintiff did not have right to pursue a private cause of action. The FTCA does not bestow upon either competitors or consumers standing to enforce its provisions; its provisions may be enforced only by the Federal Trade Commission. Similarly, crimes are prosecuted by the government, not by private parties. As for the CUIPA claims, the Court noted that the plaintiff did not specifically assert that the wrongful acts alleged occurred with such frequency as to indicate a general business practice, as required by the statute. The Court also cited to other cases in the District of Connecticut where only generalized allegations were made. Even where a plaintiff enumerates other cases where allegations have been made against the same insurer, the prior instances of insurance misconduct offered to demonstrate a general business practice must be not only specifically alleged but must also be sufficiently similar to the allegations at issue to support the conclusion of a general business practice. Thus, since the plaintiff’s allegations did not meet standards, the Court dismissed the CUIPA claim. Of note, the Court recognized that Connecticut Superior Courts have been divided over the question of whether a bare allegation of a general business practice devoid of factual support is sufficient at the pleading stage under state law. However, the cases adopting the more lenient view have been distinguished by courts in the District of Connecticut on the ground that they applied the Connecticut pleading standard, rather than the standard announced in prior U.S. Supreme Court cases, which requires more than the bare conclusory allegations accepted by the state court.
Superior Court – Transfer of Insured’s Interests – Motion for Summary Judgment In Doan v. Travelers Indemnity Co., the plaintiff was injured in an accident while driving a vehicle with the permission of a someone who was listed as a driver on the applicable insurance policy. She filed an action seeking Underinsured Motorist benefits from Travelers. Even though the named insured had died approximately one year prior to the accident, Travelers renewed the policy over a month before the subject accident. Travelers moved for summary judgment on multiple grounds. The policy’s “Transfer of Your Interests” provisions state that if the named insured dies, coverage will be provided to the surviving spouse if a resident in the same household at the time of death, and to the legal representative of the deceased person. Further, coverage would only be provided until the next anniversary of the policy’s original effective date. Here, there was no evidence that the plaintiff was the named insured’s surviving spouse or the legal representative, which was fatal to the plaintiff’s claim for coverage. Further, since the anniversary of the policy’s original effective date was over a month before the subject accident, such facts presented an additional bar to the plaintiff’s claim. The plaintiff argued that Travelers would be unjustly enriched by having received premiums for the policy, but the Court noted that the plaintiff had not included a claim for unjust enrichment in her complaint. Moreover, there was no evidence that the plaintiff herself had paid the premiums, which would be an essential element of unjust enrichment. The Court granted the motion for summary judgment.
U.S. District Court – Duty to Defend – Motion for Summary Judgment In Providence Mutual Fire Ins. Co. v. Laires, the insurer sought a declaration that it had no duty to duty or indemnify its insured in connection with a personal injury action. The underlying action arose out of an alleged dog bite incident where the plaintiff was attacked at the insured’s residence by the insured’s dog. The insurer, which filed a motion for summary judgment, had denied coverage based on the insured’s late notice of the claim, and due to the insured having made materially false statements and material misrepresentations when applying for his insurance policy. As to the notice issue, the insured argued that he provided notice when he became aware of the lawsuit against him, and that the insurer had provided no evidence that the delay caused it to suffer any prejudice. The Court did not reach the notice issue and instead decided the motion on the issue of materially false statements and material misrepresentations. The insurer argued that the insured, in his application, answered “no” when asked if animals were kept on the premises. The insured argued that his application was completed by his insurance broker and not by the insured himself. There was no dispute that the insurer would not have issued the policy had it known that a dog lived at the premises. The Court noted that under Connecticut law a person may not claim that a misrepresentation is innocent solely because the person failed to read the insurance application before signing it. Here, the insured signed the application, acknowledging that the contents therein were true and accurate. According to the Court, whether or not the insured personally reviewed the answers or checked for their accuracy is of no consequence. In addition, an insurance broker is the agent of the insured in obtaining an insurance policy, and the relationship manifested consent by the insured to the broker that the broker shall act on the insured’s behalf and subject to his control, and consent by the broker to so act. The Court granted the motion for summary judgment and declared that the insurer had no duty to defend or indemnify the insured in the underlying personal injury action.
Superior Court – Underinsured Motorist Benefits – Motion for Summary Judgment In Grandpre et al v. American Modern Home Ins Co. et al, the plaintiffs, who were husband and wife, filed an action seeking Underinsured Motorist (“UIM”) coverage benefits from four different insurers, including Ohio Casualty Insurance Company (“Ohio Casualty”). At the time of the subject motor vehicle accident, Mr. Grandpre was operating a 1985 Mack Truck. The covered vehicle listed in the Ohio Casualty policy was a 2003 Ford F550SD. Ohio Casualty moved for summary judgment stating that the UIM benefits of its policy applied only for the insured vehicle. As Ohio Casualty admitted, the Connecticut Supreme Court has repeatedly held that uninsured/underinsured motorist coverage is person oriented, not vehicle oriented and applies wherever a person may be. However, Ohio Casualty argued that this mandate did not apply here because the policy at issue was a business policy not a personal policy. However, the Court noted that Ohio Casualty issued the policy to Mr. Grandpre, an individual, and that the definition of insured included “the named insured and any family member” and “anyone else occupying a covered auto or a temporary substitute for a covered auto.” The Court analyzed the policy language and determined that to construe the UIM coverage as applying to Mr. Grandpre only if he was occupying the covered auto would render other portions of the UIM coverage section meaningless. The Court followed the reasoning of multiple out of state decisions that have addressed this specific issue, and denied Ohio Casualty’s motion for summary judgment.