Plaintiff Must Prove General Business Practice to Get Bad Faith Damages

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In Paul Harrigan v. Fidelity National Title Insurance Company, No. AC 44424, Court of Appeals of Connecticut (September 6, 2022) the dispute was resolved after a lengthy and detailed examination of the facts and law digested below.

FACTS

Paul Harrigan, appealed from the judgment of the trial court, following a bench trial, rendered in part in favor of the defendant, Fidelity National Title Insurance Company, in connection with a title insurance policy (title policy) issued by the defendant to the plaintiff. Harrigan challenges the judgment in favor of the defendant only with respect to count two of the operative complaint, the third revised complaint, which alleges that the defendant’s conduct in handling an insurance claim filed by the plaintiff pursuant to the title policy violated the Connecticut Unfair Insurance Practices Act (CUIPA); General Statutes § 38a-815 et seq.; and that such unfair and deceptive acts or practices of the defendant thereby violated the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. Harrigan claims on appeal that:

  • the court applied an incorrect standard in its analysis of whether the defendant violated CUIPA by requiring a finding of common-law bad faith by the defendant for the plaintiff to establish a violation of CUIPA,
  • when the proper standard is applied, the record sufficiently demonstrates that the defendant violated the relevant provisions of CUIPA, and
  • the evidence submitted by Harrigan establishes that the defendant’s unfair practices were part of a general business practice, as required under General Statutes § 38a-816 (6).

The court found that sometime in the late fall of 2011, Harrigan conclusively learned that he did not, in fact, hold title to the disputed area. By letter to the defendant Harrigan made a claim upon his title insurance policy regarding the disputed area. By letter to Harrigan the defendant acknowledged receipt of his claim and the defendant essentially accepted his claim. The issue between the parties always involved the claim’s value.

In a third revised complaint, the plaintiff alleged four counts against the defendant. The second count, which alleges a violation of CUTPA, is the only count at issue in this appeal. In count two, the Harrigan alleged that the defendant was involved in the trade or commerce of providing title insurance coverage to individuals and entities who hold title to real property and that the defendant engaged in unfair and deceptive acts or practices in its administration of the title policy and handling of the plaintiff’s claim in violation of CUIPA.

The matter was tried to the court, which rendered judgment in part in favor of the defendant with respect to counts two, three and four of the third revised complaint.

ANALYSIS

In order to sustain a CUIPA cause of action under CUTPA, a plaintiff must allege conduct that is proscribed by CUIPA. A plaintiff cannot bring a CUTPA claim alleging an unfair insurance practice unless the practice violates CUIPA.

If the factual basis of a trial court’s decision is challenged, the clearly erroneous standard of review applies. A court’s determination is clearly erroneous only in cases in which the record contains no evidence to support it, or in cases in which there is evidence, but the reviewing court is left with the definite and firm conviction that a mistake has been made. The legal conclusions of the trial court will stand, however, only if they are legally and logically correct and are consistent with the facts of the case.

There was no evidence presented that could have supported a finding that the defendant violated the statute. Indeed, the trial court specifically found that the primary issue in the case was the value of the plaintiffs claim, not its legitimacy, that at no time did the defendant indicate any unwillingness to pay the claim, and that the defendant never denied the claim and, in fact, essentially accepted the plaintiffs claim not long after receiving his demand letter.

The evidence presented by Harrigan which shows that the parties disagreed about various matters such as the date of loss, the relocation of the septic system, and the value of the plaintiffs claim, simply does not demonstrate any misrepresentations by the defendant, nor did the court find any. In fact, the court specifically found that at no time during the claims settlement process did the defendant’s personnel act in bad faith or come within close proximity of doing so.

Moreover, the evidence presented shows numerous communications between the plaintiff and representatives of the defendant concerning the status of the plaintiffs claim and why its resolution had been delayed for more than five years, which could support a finding of a violation of subdivisions (B) and (F) of § 38a-816 (6), both of which relate to delays in communications and settling the claim.

During the trial, the plaintiff sought to admit into evidence exhibit 44, which consisted of the consumer complaints

The Court of Appeal next set forth general principles governing its resolution of this issue. The Supreme Court has concluded “that claims of unfair settlement practices under CUIPA require a showing of more than a single act of insurance misconduct.”  [Mead v. Burns, 199 Conn. 651, 659, 509 A.2d 11 (1986)]

In the present case, the court specifically found that the defendant’s actions in this case clearly did not represent shining examples of sterling claims management practices, and that the issues that arose and the delay that resulted in this case were due, in no small part, to Harrigan’s unrealistic expectations colliding with the defendant’s maddening corporate inefficiency. Furthermore, in the present case, a great deal of the delay was attributable to the issue raised by the plaintiff concerning the septic system, which the court found not to be relevant to the diminution in value figure. The delays in the present case, therefore, were caused by both the plaintiff and the defendant and resulted, in part, from corporate inefficiencies and mismanagement of the defendant. The evidence in the present case does not support a finding that the defendant ignored communications from the plaintiff

The plaintiff, having failed to establish a general business practice of the defendant, has failed to set forth a valid CUIPA claim, which is fatal to his CUTPA claim in count two. The court, therefore, properly rendered judgment in favor of the defendant with respect to the CUTPA claim in count two.

ZALMA OPINION

Delay in resolving a claim due to actions of the insured and the insurer – whether less than competent claims handling – is not evidence of bad faith or violation of the state statutes requiring insurers to treat the insured fairly and in good faith. The trial court and the appellate court decided there was no evidence of a general business practice to act in bad faith and the claim of Harrigan that the insurer acted in bad faith failed after a lengthy and detailed opinion.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

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An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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