Kellogg v. Middlesex Mut. Assurance Co.

• Decision Date: 22 March 2022
• Docket Number: AC 43421
• Citation: 211 Conn.App. 335,272 A.3d 677
• Parties: Sally KELLOGG v. MIDDLESEX MUTUAL ASSURANCE COMPANY
• Court: Connecticut Court of Appeals

211 Conn.App. 335

272 A.3d 677

Sally KELLOGG

v.MIDDLESEX MUTUAL ASSURANCE COMPANY

AC 43421

Appellate Court of Connecticut.

Argued September 20, 2021

Officially released March 22, 2022

Kathleen F. Adams, Simsbury, with whom, on the brief, was Peter J. Ponziani, for the appellant (defendant).

Frank W. Murphy, Norwalk, for the appellee (plaintiff).

Moll, Alexander and Flynn, Js.

MOLL, J.

The defendant, Middlesex Mutual Assurance Company, appeals from the judgment of the trial court denying its motion for summary judgment on the second revised and amended complaint filed by the plaintiff, Sally Kellogg, in which she raised claims of breach of contract, a violation of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., arising from a violation of the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a-815 et seq., and promissory estoppel. On appeal, the defendant claims that the court improperly denied its motion for summary judgment because (1) the breach of contract claim was barred pursuant to (a) the doctrine of res judicata and (b) the suit limitation provision of a "restorationist" property insurance policy issued by the defendant, (2) the CUTPA/CUIPA claim (a) was barred pursuant to General Statutes § 42-110g (f), the applicable statute of limitations, and (b) failed as a matter of law, and (3) the promissory estoppel claim (a) was barred pursuant to the suit limitation provision of the policy and (b) failed as a matter of law. We reverse the judgment of the trial court.

The following facts, as set forth by our Supreme Court in a prior decision addressing a separate matter involving the parties, and procedural history are relevant to our resolution of this appeal. "The plaintiff ... is the owner of a historic property in the city of Norwalk (property). She insured the property through a ‘[r]estorationist’ policy issued by the defendant .... This restorationist policy was different from a typical homeowners policy in that it had no monetary policy limit, and it covered the replacement or restoration cost of the property without deduction for depreciation. Under the policy, payment of the full restoration cost would not be immediate, but would be made in two parts, with depreciation initially withheld. The policy required the defendant to first pay the actual cash value of the loss. Once the restoration or replacement was complete, the policy required the defendant to pay the amount ‘actually spent to repair, restore or replace the damaged building.’ This two step process is typical in replacement cost policies, intended to address concerns that a homeowner might accept the full restoration cost but not actually restore the property, thus receiving a windfall.

"While the restorationist policy was in effect [in 2010], the property suffered a casualty loss when a four and one-half ton tree fell onto the roof and chimney during a storm, damaging the interior, exterior, and foundation of the home. Shortly after the incident, the plaintiff filed a claim on her restorationist policy. Because the plaintiff's and the defendant's adjusters were unable to agree on the amount of the loss, the plaintiff invoked the policy's appraisal provision.¹ That provision required the loss amount to be determined through an unrestricted arbitration proceeding, meaning that the arbitrators are empowered to decide issues of law and fact, and the award is not conditioned on judicial review. ...

"To establish the appraisal panel, the plaintiff and the defendant, pursuant to the restorationist policy, each appointed one appraiser to serve as an arbitrator, and these two appraisers chose a neutral third arbitrator to act as an umpire. The appraisers each independently set the loss and submitted their valuations to the umpire. The plaintiff's appraiser claimed the damage was in excess of $1.6 million, but the defendant's appraiser believed the property could be restored for approximately $476,000. The appraisers fundamentally disagreed on two issues: the extent of damage caused by the tree, and the cost to repair the covered damage. The defendant's appraiser believed not all of the claimed damage was related to the incident and that much of the damage that was related could be fixed for less than the plaintiff's appraiser had claimed. The umpire evaluated the differences between the two appraisers’ submissions and set the loss, which was an amount between the two submissions. Before setting the loss, the umpire visited the property seven times to evaluate the damage to the building and its contents. The umpire also reviewed and considered more than 300 pages of the plaintiff's submissions. He conducted hearings with multiple witnesses, including two asbestos abatement experts and a property damage expert. He also reviewed written submissions from other experts and consultants, all of which he considered when determining the award. On certain items, the umpire agreed with the valuations of the plaintiff's appraiser, and on other items he agreed with the defendant's appraiser. He then gave both appraisers his preliminary assessment of the loss and gave them an opportunity to challenge his assessment and to advocate for their respective positions.

"The defendant's appraiser accepted the umpire's valuation, which became the appraisal panel's decision on the amount of the loss, and the panel issued its arbitration award in two parts: first, it awarded $578,587.64 for ‘replacement or restoration cost’ of the building on the property, which the panel depreciated to its actual cash value of $460,170.16, with the difference withheld until the plaintiff completed repairs, and, second, the panel later awarded an additional $79,731.68 for the actual cash value loss to the plaintiff's personal property." (Citation omitted; footnote added and footnotes omitted.) Kellogg v. Middlesex Mutual Assurance Co. , 326 Conn. 638, 640–43, 165 A.3d 1228 (2017).

In September, 2013, the plaintiff filed in the Superior Court an application to vacate the arbitration award pursuant to General Statutes § 52-418.² Id., at 643, 165 A.3d 1228 ; see Kellogg v. Middlesex Mutual Assurance Co. , Superior Court, judicial district of Stamford-Norwalk, Docket No. CV-13-6019847-S. On February 5, 2016, following eight days of trial, the trial court, Hon. Kevin Tierney , judge trial referee, granted the application to vacate the award and remanded the matter for a new arbitration hearing on the basis of its conclusion that the award violated § 52-418 (a) in two ways. Kellogg v. Middlesex Mutual Assurance Co. , supra, 326 Conn. at 643–44, 165 A.3d 1228. First, "[r]elying on a valuation based on its own conclusions," the court determined that the amount of the award was insufficient, thereby prejudicing the plaintiff's " ‘substantial monetary rights’ " in violation of § 52-418 (a) (3). Id., at 644–45, 165 A.3d 1228. In support of its analysis, "[t]he court identified thirty-four instances in which the plaintiff had claimed damage to a specific portion of the property and the [appraisal] panel awarded less than the plaintiff had requested, sometimes awarding nothing at all." Id., at 644, 165 A.3d 1228. Second, the court concluded that the award reflected a manifest disregard of the law in violation of § 52-418 (a) (4). Id., at 645, 165 A.3d 1228. "More specifically, the court concluded, based on its own interpretation of the [restorationist] policy language, that the panel's decision ‘[was] in obvious error’ when it calculated depreciation in a policy that ‘provides for no depreciation ....’ " Id. On February 19, 2016, the defendant appealed from Judge Tierney's decision to this court, and, subsequently, our Supreme Court transferred the appeal to itself pursuant to General Statutes § 51-199 (c) and Practice Book § 65-1 (appraisal appeal). Id.

On March 7, 2016, less than one month after the defendant had filed the appraisal appeal, the plaintiff commenced the present action against the defendant. The plaintiff's original complaint set forth six counts: breach of contract (count one); breach of the covenant of good faith and fair dealing (count two); negligence³ (count three); a CUTPA/CUIPA claim⁴ (count four); negligent infliction of emotional distress (count five); and promissory estoppel (count six). By way of an amended complaint filed on April 14, 2016, the plaintiff added a seventh count asserting a separate CUTPA violation untethered to CUIPA (count seven). In support of all of her claims, the plaintiff alleged, inter alia, that the defendant had failed to compensate her adequately for the damage caused to the property and to properly implement the terms of the restorationist policy.

On April 27, 2016, the defendant filed a motion to dismiss the plaintiff's amended complaint, claiming that, in light of the appraisal appeal pending at the time, the present action was (1) not ripe or, alternatively, (2) barred pursuant to the prior pending action doctrine. On November 7, 2016, the court, Heller, J. , denied the motion to dismiss. The court first rejected the defendant's ripeness argument, determining "that the plaintiff's claims in this action were not before the appraisal ... panel. They are independent of the claims asserted in the proceeding to vacate the [arbitration] award, and they are not contingent on the outcome of the [appraisal] appeal .... They are ripe for adjudication, and, therefore, they are justiciable." The court then rejected the defendant's claim invoking the prior pending action doctrine, concluding that a pending appeal is not a prior pending action.

On August 22, 2017, while the present action was pending, our Supreme Court issued a decision in the appraisal appeal concluding that Judge Tierney improperly had vacated the arbitration award because (1) his disagreement with the amount of the award did "not establish that the arbitrators violated § 52-418 (a) (3) and was not a proper ground for vacating...