Durham notified her automobile insurance carrier, Metropolitan Group Property and Casualty Insurance Company. Metropolitan denied her claims.

Durham sued the insurer for breach of contract, breach of the covenant of good faith and fair dealing, and violation of the Connecticut Unfair Trade Practices Act (“CUTPA”), Conn. Gen. Stat. § 42-110a, et seq. Durham sought compensatory damages, punitive damages, and all other costs and fees.

The insurer moved to dismiss for failure to state a claim.

Connecticut law provides that:

[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.

Conn. Gen. Stat. 42-110b(a).

Court rejected Metropolitan's argument

The district court denied Metropolitan's motion.

In its decision, the district court first rejected Metropolitan's argument that Durham's complaint had not alleged facts showing that the insurer had breached the insurance policy.

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According to the district court, Durham had “adequately” alleged the formation of a contract because she established “the existence of insurance policy number 843371969-0.” The district court added that she had adequately alleged performance of her part of the contract because she claimed she had paid all premiums owed up to the point of the accident. It pointed out that she also had alleged that her insurance policy covered accidents involving others who were uninsured or underinsured, which included Lein, and that Metropolitan had failed to cover the accident involving him.

The district court also explained that Durham had averred that her injuries resulting from the accident with Lein were the “legal responsibility” of Metropolitan, which the district court said plausibly could be “construed as a duty under the contract to provide coverage for such accidents.” Because the insurer had failed to cover her injuries, Durham sought compensatory damages, the district court added.

Insurer provided 'no legal support'

According to the district court, Metropolitan had provided “no legal support” demonstrating why such allegations failed to satisfy the pleading requirements and had not provided language from the insurance policy demonstrating otherwise.

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The district court reached the same result with respect to Metropolitan's motion to dismiss Durham's second cause of action, for breach of the covenant of good faith and fair dealing.

Here, the district court explained, Durham's “only allegation” specifically tied to the breach of the covenant of good faith and fair dealing claim was that Metropolitan had engaged in a “baseless denial of Claim ALH17439RE.” Such an assertion, in the district court's opinion, constituted “at best negligence or a coverage dispute” and was “insufficient” to recover for breach of the covenant of good faith and fair dealing.

However, it continued, Durham later stated with respect to her CUTPA claim that Metropolitan had “sold insurance to consumers with no intent to cover claims made on such policies to the extent they are required to by contract and by law, and have engaged in an intentional campaign of making improper denials of such claims, despite knowing of their ongoing and legal and contractual obligations.”

The district court ruled that these allegations, when construed in a light most favorable to Durham, constituted “more than a coverage dispute or negligence.” Therefore, it denied Metropolitan's motion as to the breach of covenant of good faith and fair dealing.

Finally, the district court reached the same result with respect to Durham's CUTPA claim. It observed that Durham had alleged that Metropolitan had violated CUTPA because it had “sold insurance to consumers with no intent to cover claims made on such policies to the extent they are required to by contract and law, and have engaged in an intentional campaign of making improper denials of such claims, despite knowing of their ongoing legal and contractual obligations.”

'Immoral, unethical or unscrupulous activity'

In the district court's opinion, that amounted to more than merely pleading a “simple breach of contract” claim (which, the district court said, was insufficient to assert a CUTPA claim), because the sale of insurance without an intent to cover claims and the intentional campaign to make improper denials were “significant aggravating circumstances” constituting immoral, unethical, or unscrupulous activity.

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The case is Durham v. Metro. Group Prop. & Cas. Ins. Co., No. 3:16-cv-01643-VLB (D. Conn. July 20, 2017).

Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. Email him at [email protected].