Double G.G. v. Underwriters at Lloyd's

• Court: Connecticut Court of Appeals
• Writing for the Court: Robinson
• Citation: Double G.G. v. Underwriters at Lloyd's, 978 A.2d 83, 116 Conn.App. 417 (Conn. App. 2009)
• Decision Date: 11 August 2009
• Docket Number: No. 29998.,29998.
• Parties: DOUBLE G.G. LEASING, LLC v. UNDERWRITERS AT LLOYD'S, LONDON.

978 A.2d 83

116 Conn.App. 417

DOUBLE G.G. LEASING, LLC v. UNDERWRITERS AT LLOYD'S, LONDON.

No. 29998.

Appellate Court of Connecticut.

Argued April 28, 2009.

Decided August 11, 2009.

William A. Conti, Torrington, with whom, on the brief, was Gregory T. Nolan, Winsted, for the appellant (plaintiff).

Lawrence A. Dugan, pro hac vice, with whom was Stephen O. Clancy, Hartford, for the appellee (defendant).

DiPENTIMA, ROBINSON and ALVORD, Js.

ROBINSON, J.

The plaintiff, Double G.G. Leasing, LLC, appeals from the summary judgment rendered by the trial court in favor of the defendant, Underwriters at Lloyd's, London. The plaintiff's two count complaint alleged breach of contract and breach of the implied covenant of good faith and fair dealing. On appeal, the plaintiff claims that the court improperly concluded that there were no genuine issues of material fact as to whether (1) Carl Glatzel, Jr., the plaintiff's sole member, owner and manager, had filed federal and state income tax returns and had failed to provide them to the defendant, and (2) the plaintiff's submission to the examination under oath satisfied the substantial compliance standard. We disagree and, accordingly, affirm the judgment of the trial court.

The following facts and procedural history, taken from the court's memorandum of decision granting the defendant's motion for summary judgment, are relevant to our consideration of the plaintiff's claims. "At all relevant times ... Glatzel ... was the sole member, owner and manager of the [plaintiff]. On February 25, 2005, the [plaintiff] purchased real property in New Milford ... from John R. Duda and the Judith H. Duda Living Trust (collectively `Duda') on which was situated a vacant, two-family residential structure. The purchase price was $550,000. The purchase was financed largely by [John] Duda and secured by an open end mortgage on the property. The [plaintiff] obtained an insurance policy from the defendant that insured the [plaintiff] against, inter alia, physical loss or damage to the property by fire for the period of March 19, 2005, to September 19, 2005. Pursuant to the policy, the defendant agreed to provide coverage for the structure with a policy limit of $360,000 on a replacement cost basis. On April 24, 2005, less than five weeks after the commencement of the policy period, the building was destroyed by fires of incendiary origin that were ignited at two separate locations at the rear of the building with the use of flammable liquid accelerant....

"By letter dated April 19, [2006], the defendant notified the plaintiff's attorney that it would require Glatzel's examination under oath and production of documents at the examination. The plaintiff's attorney requested three continuances of the examination. After three more letters from the defendant's attorney, Glatzel appeared for the examination on December 7, 2006. He answered many questions but stated that he did not know the answers to others and did not produce many of the requested documents at that time. He produced some documents subsequent to his examination. However, though he admitted at his examination that he had filed personal income tax returns, he never produced them."

The complaint, filed April 23, 2007, alleged that the plaintiff's direct loss was approximately $350,419.99 and that the plaintiff had substantially and materially fulfilled all terms, conditions and requirements of the policy but that the defendant had not paid the loss and damage in accordance with the terms and conditions of the policy in breach of the insurance contract. The complaint further alleged that the defendant had issued excessive requests for records and documents during the course of its investigation of the fire for the purpose of unfairly impeding the plaintiff's right to receive benefits that it reasonably expected to receive under the contract and, therefore, had breached the implied covenant of good faith and fair dealing.

The defendant moved for summary judgment on September 26, 2007, on the ground that the action was barred because the plaintiff failed to comply with essential conditions of the contract concerning the insured's duties after loss relating to the production of documents and records. The court determined that the defendant's attorney had submitted a written request to the plaintiff's attorney by letter dated April 19, 2006, and made a demand that Glatzel and his father, Carl Glatzel, Sr., submit to examinations under oath on May 4, 2006, and that they bring certain documents with them on that date, including, but not limited to: "All state and federal tax returns, whether individual, joint, several, corporate, partnership or business filed by you or on your behalf or on behalf of any entity or business which employed you or in which you own any ownership interest (excluding an ownership interest solely by reason of stock ownership in a corporation which is publicly traded on a recognized stock exchange) for the period which includes calendar years 2001 through the present.... All financial statements, books of account, general ledgers or other financial documents prepared or created by you or any other person or entity which pertain to your financial condition...."¹

The requested examination of Carl Glatzel, Jr., was rescheduled numerous times at the request of the plaintiff's attorney, delaying its commencement from May 5 to December 7, 2006. During the examination, the following colloquy took place:

"[The Defendant's Counsel]: So, is it your testimony that all of the income that Twin Eagles Construction [a construction concern that Glatzel owns] has earned since at least 2001 —

"[The Witness]: To the best of my knowledge, yes.

"[The Defendant's Counsel]: — has been recorded on tax returns that were filed by you personally or by Twin Eagles Construction?

"[The Witness]: I didn't file, my accountant takes care of all the paperwork, I go out and do the jobs. When it comes to paperwork. I'm lost.

"[The Defendant's Counsel]: You signed tax returns?

"[The Witness]: Oh, yeah.

"[The Defendant's Counsel]: You have filed taxes?

"[The Witness]: Yes. To the best of my knowledge — I'll call him and have him send the stuff to you, but you're asking for numbers I don't have, you know what I'm saying? I don't know exact numbers to tell you, because I don't know what they are....

"[The Defendant's Counsel]: Typically, how much do you pay in income tax each year?

"[The Witness]: Numbers, again. I don' know what it is.

"[The Defendant's Counsel]: ... Have you paid income tax in each of the last five years?

"[The Witness]: I don't know what was paid. I don't know how much, if that's what you're getting at. I don't have a number.

"[The Defendant's Counsel]: My question was —

"[The Witness]: To the best of my knowledge, yes. I heard the question.

"[The Defendant's Counsel]: To the best of your knowledge, you have paid income taxes, you just don't know how much money.

"[The Witness]: Right."

The topic also came up later during the same examination:

"[The Defendant's Counsel]: That brings us exactly to the item two on exhibit A, which reads that you were requested to produce all financial statements, books of account, general ledgers or other financial documents prepared or created by you which pertain to your financial condition and that of any other corporation, partnership, entity or business which employed you or in which you own an ownership interest "[The Witness]: I didn't read all that.

"[The Defendant's Counsel]: ... from January, 2001, to the present.

"[The Witness]: I thought he meant [the plaintiff].

"[The Defendant's Counsel]: No, that's ... let me just clarify, it reads specifically, which pertain to your financial condition or that of any other corporation, partnership, entity or business which employed you in which you own an ownership interest.

"[The Witness]: Well, I misunderstood it.

"[The Defendant's Counsel]: Well, let me clarify that the request is directed to you, sir, as hundred percent owner of [the plaintiff], president, stockholder, controlling person.

"[The Witness]: [The plaintiff] is easy. There's like a hundred dollars in the account. That thing hasn't done nothing.

"[The Defendant's Counsel]: Right. So, I'm speaking to you, personally.

"[The Witness]: But I just come through that. That's why I should have read the whole damn thing, but I didn't.

"[The Plaintiff's Counsel]: We will provide you with ...

"[The Witness]: Absolutely, I can provide that.

"[The Defendant's Counsel]: The problem, and let me get ...

"[The Plaintiff's Counsel]: I know.

"[The Defendant's Counsel]: Let me cut to the chase.

"[The Witness]: I wish you could.

"[The Plaintiff's Counsel]: Right.

"[The Defendant's Counsel]: [The plaintiff's attorney], I'm sure, understands that the record right now is not acceptable.

"[The Plaintiff's Counsel]: We understand. We'll provide you with additional information.

"[The Defendant's Counsel]: And the opportunity to request the witness again?

"[The Plaintiff's Counsel]: Absolutely, we'll make ourselves available."

The defendant's attorney sent a request for additional documentation from the plaintiff on December 18, 2006.² In response, Glatzel provided the defendant with copies of certain documents.³ He did not provide the defendant with copies of federal or state tax returns filed by himself or on behalf of the plaintiff. At oral argument on the motion for summary judgment on February 1, 2008, the court asked the plaintiff's attorney why he had not provided the defendant with information about profit loss statements and the plaintiff's taxes. The plaintiff's attorney replied: "Those documents don't exist. I think the most important thing, and the most concrete thing we can talk about, is the tax situation. And, I think I can represent [that] there is an investigation going on, and my client is resolving his tax issues. I mean, there's no doubt...