DocketNumber: No. CV 91 0057441
Citation Numbers: 1995 Conn. Super. Ct. 9279
Judges: PICKETT, J.
Filed Date: 8/24/1995
Status: Non-Precedential
Modified Date: 7/5/2016
The complaint alleges the following facts. In August 1990, the plaintiffs contracted North American to procure automobile, homeowner and business insurance. The plaintiffs provided North American with relevant information and documentation needed to obtain coverage and, relying on North American's reputation and claims of expertise, signed various blank application forms. The plaintiffs paid the necessary premium, thereby contracting with North American to procure casualty insurance as instructed. Subsequently, the plaintiffs received the necessary policies of insurance covering their residence in Thomaston, Connecticut. On December 20, 1990, the plaintiffs sustained a covered loss when their residence and its contents were destroyed by a fire. Following this loss, the plaintiffs discovered that they did not have adequate insurance on either the dwelling or its contents. They also discovered that the policy of insurance procured by North CT Page 9280 American did not have a rider or other language providing either "full replacement" or "guaranteed replacement" coverage despite specific instructions to include such language.
The first count of the complaint alleges that North American was negligent in the following ways: by failing to examine the documentation provided to it by the plaintiffs; by relying on a declaration sheet that had factual errors as a basis for an amount significantly less than necessary; and by failing to provide the necessary rider covering "full replacement" or "guaranteed replacement." The second count alleges breach of contract. The third count alleges a violation the General Statutes Sec.
North American filed an amended answer and eleven special defenses. These special defenses include claims of contributory negligence in failing to provide complete and accurate information, failing to examine the policy when received, withholding relevant information, failing to disclose prior loss history or policy cancellations, res judicata, collateral estoppel, and rescission of the insurance policy in question due to the plaintiffs' misrepresentation of material facts on the policy application. The plaintiffs filed a general denial of these special defenses.
North American, who is joined by the third-party defendants Maryland Casualty and Assurance Company, now moves for summary judgment on the basis of the outcome of the parallel federal litigation. In support of its motion, the defendant filed memorandum of law and supporting documentation. The plaintiff timely filed a memorandum in opposition and a copy of an affidavit filed in the federal litigation.
"Summary judgment procedure, generally speaking, is an attempt to dispose of cases in a manner which is speedier and less expensive for all concerned than a full-dress trial." Orenstein v.Old Buckingham Corp.,
North American moves for summary judgment on two grounds. First, it argues that in their application for insurance, the plaintiffs made misrepresentations of material fact concerning their prior loss history and prior insurance cancellations. North American contends that the plaintiffs had a duty to read the contents of the application, and their failure to do so is inexcusable negligence that results in the rescission of the policy. North American's second ground is that the plaintiffs' claims have been rendered moot by virtue of the federal court's decision invalidating the insurance policy. North American argues that the issue of whether the plaintiffs are entitled to guaranteed replacement coverage is moot because by their own inexcusable negligence, the plaintiffs have no insurance coverage of any kind.
In opposition to this motion, the plaintiffs argue that the issues addressed in the federal litigation are distinct from the issues presently before the court. The most significant of these issues, the plaintiffs contend, is the duty owed by insurance agents in procuring insurance coverage. The plaintiffs also contend that the factual issue of what the plaintiffs told the North American's employee when applying for the insurance was never resolved in the federal litigation. Additionally, the plaintiffs contend that there are genuine issues of material fact as to North American's special defenses that preclude summary adjudication of this case.
An insurance agent owes a duty to his principal to exercise reasonable skill, care and diligence in effecting the insurance, and any negligence or other breach on his part which defeats the insurance will render him liable to his principal for the resulting loss. Ursini v. Goldman,
Neither party addressed in their memoranda the case of Ursiniv. Goldman, supra, which is the seminal Connecticut decision addressing the issue of the liability of an insurance agent or broker in procuring inadequate or ineffective property insurance. See Annotation, 72 A.L.R.3d 747 (1976). In Ursini, the plaintiff, after his store had been burglarized, contracted with the defendant insurance broker to procure burglary insurance. Ursini v. Goldman,
supra,
The plaintiff proceeded to sue the defendant broker and received a favorable jury verdict. Id., 559. The Supreme Court upheld the verdict and discussed the defendant's contention that the "plaintiff was chargeable, as a matter of law, with actual knowledge of the contents of the policy accepted by him." Id., 562-63. The court stated that
[t]he general rule is that where a person of mature years and who can read and write, signs or accepts a formal written contract affecting his pecuniary interests, it is his duty to read it and notice of its contents will be imputed to him if he negligently failed to do so; but this rule is subject to qualifications, including intervention of fraud or artifice, or mistake not due to CT Page 9283 negligence, and applies only if nothing has been said or done to mislead the person sought to be charged in or to put a man of reasonable business prudence off his guard in the matter.
(Citations omitted.) Id., 562. The court also noted that where a broker is aware of circumstances violating a condition of the insurance policy and fails to inform the insured of these circumstances, the broker may be liable. Id., 562-63, citingFries-Breslin Co. v. Bergin,
In the present case, North American also contends that the plaintiffs are chargeable with actual knowledge of the contents of the policy application since they did not read it. Thus, North American contends that the plaintiffs are not entitled to any recovery because the application contains material misrepresentations of fact concerning prior loss history and insurance cancellations. As in Ursini, however, an issue of fact exists as to whether North American's employee was aware of the plaintiffs' prior loss and insurance cancellation when he procured the insurance. North American did not present sufficient evidence on this motion to show, as a matter of law, that its employee was unaware of these circumstances that effectively invalidated the plaintiffs' insurance policy. Knowledge of circumstances that would invalidate the policy and failing to inform the insured of these circumstances may render an agent liable regardless of the insured's failure to read the application or policy. Ursini v.Goldman, supra,
North American submitted the following documentation in support of its motion: a copy of the federal district court's memorandum of decision, a copy of the insurance application, portions of deposition testimony of the plaintiff Julien Pinette and the defendant's employee, James Cooper, and a copy of the memorandum of decision of the Second Circuit Court of Appeals. North American, however, failed to submit any affidavits in support of its motion. Instead, its documentation consists primarily of excerpts of uncertified deposition testimony that has been held to CT Page 9284 be insufficient as a basis for granting a summary judgment motion.Oberdick v. Allendale Mutual Insurance Co.,
North American places emphasis on the conclusion of the federal district court and court of appeals that the insurance policy was unenforceable against the insurer on the basis of the plaintiffs' misrepresentation of their prior loss history on the policy application. In fact, its second ground for summary judgment rests on this determination that the policy is unenforceable against the insurer. The defendant apparently attempts to give collateral estoppel effect to the federal courts' decisions invalidating the policy. For this issue to be subject to collateral estoppel in this suit, it must have been fully and fairly litigated, actually decided and necessary to the federal court's judgment; Aetna Casualty Surety Co. v. Jones,
The issues that the federal court addressed in deciding whether to rescind the insurance policy are not identical to those present in this action. The memoranda of decision of both the CT Page 9285 district court and the court of appeals show that the determination of the agent's knowledge was not necessary for the court to reach the conclusion that the policy was unenforceable. The district court stated that "the plaintiffs are bound by the terms of the insurance application. . . notwithstanding what Mr. Pinette may or may not have said over the phone [to his agent] concerning the fire." Pinette v. Assurance Company of America, United States District Court, District of Connecticut, No. 291CV01026 (April 13, 1994, Covello, J.). Additionally, the court of appeals stated, "[t]hat Pinette supplied the correct information to the agent, who then wrote down the wrong answer, is insufficient standing alone to relieve plaintiffs of responsibility for the misrepresentation." Id., United States Court of Appeals for the Second Circuit, No. 94-7622 (April 7, 1995). The federal court decisions, therefore, determined that what the plaintiffs said to their agent, standing alone, was irrelevant in deciding the liability of the insurer under the policy.
In this case, however, the plaintiffs seek to recover directly from their agent for negligence and breach of contract. As stated earlier, the Ursini decision indicates that in an action against the agent or broker, knowledge of conditions that would invalidate the policy and failing to inform the insured of these conditions is sufficient to hold an agent liable for negligence or breach of contract. Ursini v. Goldman, supra,
In arguing that the federal court decisions render moot the plaintiffs' claim, North American also points out that the claim is based on whether or not a guaranteed replacement cost policy was sought or included in the policy. North American contends that this issue is moot because, if the plaintiffs are not entitled to recover under the policy at all, it makes no difference whether the policy contained a guaranteed replacement clause. North American, however, ignores that the plaintiffs have also alleged two other grounds of negligence: failing to read the documentation supplied with the application; and relying on a declaration sheet that had factual errors. Thus, the plaintiffs negligence claims are not limited to North American's alleged failure to include a guaranteed CT Page 9286 replacement cost provision in the policy. Additionally, the second count of the complaint for breach of contract is not limited to allegations of failing to include a guaranteed replacement cost clause in the policy.
Moreover, simply because the plaintiffs cannot recover against their insurer under the policy does not render the plaintiffs' claims against their agent moot. In Ursini, supra, the plaintiff's policy was held unenforceable against the insurer because of the failure to include a prior loss in the policy application, but the plaintiff was still entitled to recover from its broker. Similarly, in this case, the federal court's decision that the policy is unenforceable against the insurer does not render moot the plaintiffs' claims of negligence and breach of contract against their agent.
For these reasons, the defendant's motion for summary judgment is denied.
PICKETT, J.