Liberty Mutual Insurance v. 4 Nurses at Work, LLC
| Decision Date | 03 March 2016 |
| Docket Number | HHDCV145038364S |
| Parties | Liberty Mutual Insurance v. 4 Nurses at Work, LLC et al |
| Court | Connecticut Superior Court |
UNPUBLISHED OPINION
On November 12, 2014, the plaintiff, Liberty Mutual Insurance Company (Liberty Mutual), initiated this unpaid worker's compensation action against the defendants, 4 Nurses at Work LLC, and Chantal Coffy, by filing a notice of application for prejudgment remedy, a proposed writ, a summons and a complaint. On January 30, 2015, the plaintiff filed the operative complaint. The four-count complaint alleges breach of contract, misrepresentation, unjust enrichment, and a CUTPA violation.
In essence, the summary of the complaint is that the defendants entered into an insurance policy (policy) where they agreed to provide worker's compensation insurance in exchange for premium payments. The codefendant, Coffy, allegedly misrepresented that her company could pay for the insurance premiums. Following a payroll audit, plaintiff submitted an invoice to the defendants for payment. The defendants did not have sufficient funds to afford the premiums, and at the outset had no intention of paying. As a result of the defendants' refusal to pay for the premiums under the policy, plaintiff suffered damages.
On April 21, 2015, the defendants filed an answer, which is tailored as a general denial and contains no special defenses or counterclaims. The defendants, however, assert that they made general payments totaling over $15, 000. After the defendants disputed the bill, the plaintiff sent a bill for $25, 000 without conducting any audit. The defendants refuse to pay any additional amount without a proper audit.
On April 24, 2015, the plaintiff filed a certificate of closed pleadings and a claim for trial list. On June 23, 2015, a trial was held before this court. The parties submitted post-trial briefs on September 22, 2015. Post-trial arguments were heard by the Court on November 23, 2015.
The plaintiff is a part of a national group required to provide insurance to companies such as 4 Nurses at Work, LLC (4 Nurses). The plaintiff provided worker's compensation insurance coverage to the defendants. Coffy is the owner of 4 Nurses, and is in the business of providing noncritical homecare to private individuals and organizations. She has been in the business for approximately eight years. She attempted to get worker's compensation insurance and contacted the Department of Labor to find out in what ways she could assist her employees. Coffy was advised that under the State of Connecticut laws, she was required to have a worker's compensation insurance policy.
Coffy already had liability insurance but could not get worker's compensation insurance except from Liberty Mutual. Through a friend she was put in contact with Brian Egan and Christ Mitra from Liberty Mutual. After completion of basic requirements, the record reflected that the worker's compensation insurance was issued to the defendants for the initial term of one year in June of 2012.
Testimony established that a worker's compensation policy is based upon an estimate of what the company's payroll is going to be for the year. At the end of the policy period, Liberty Mutual obtains the actual payroll figures through an audit. After the end of the policy period, a company's specified documents will be reviewed such as, payroll records, tax returns, quarterly tax returns for the payroll and records of subcontractors, and certificates of insurance. The purpose of the audit is to determine the actual payroll for the policy period. Plaintiff's Exhibit 1 is the policy issued to the defendants for the period of June 2012 to June 2013. In the present case, Delvento conducted the premium audit for the defendants and issued a premium audit report; submitted as Exhibit 2. Delvento conducts three to four hundred audits similar to the defendants each year.
Christ Couch, senior account receivable analyst, handles the collection accounts and described the procedure about the application process and issuing the policy on the estimated payroll. Two different policies were issued to the defendants. There is the 012 policy and a final audit for that policy. There is also the 013 policy, and it was the endorsement that was done to that policy which created a bill for $52, 597. The policy ending in 012 is the subject of this litigation. The plaintiff had a policy with the defendants for 2012. The next policy was cancelled for nonpayment. The original bill submitted for $52, 597 was adjusted due to cancellation with the unused portion of the defendant's premiums which brought the total bill down to $25, 943.
The trial testimony of Coffy attempted to elicit that she contested the amount of the bill upon receipt. She claimed it was " too high, " compared to the New York premium. Coffy also attempted to show that the statement of agents Egan and Couch, were admissions on the part of the plaintiff. Coffy's testimony showed that she paid a premium to the plaintiff totaling approximately $11, 500. Upon further questioning, she conceded that she did not have proof of payments with her in court.
Coffy's testimony showed that she attempted to dispute the audit report. She admitted that she did not fill out the required form, but instead wrote a letter. Additionally, under cross examination in relation to Exhibit 4 which describes the procedure to be followed in the event of a dispute between the parties, it was established that Coffy did not follow the prescribed procedure.
Coffy testified that she did not receive the complete insurance page, other than four or five pages from the insurance policy. Coffy conceded that she did not hire a third-party accountant or anyone to double-check the audit that the plaintiff performed. Coffy stated that she spoke to an agent from AIG who said the numbers were, " too high." Coffy contended that she and her company had the ability to pay $25, 000, but the amount the plaintiff kept asking for was $52, 800. Coffy went on to say, " [e]verybody who looked at it said that's for over a million dollars in payroll." (Transcripts page 18.) Finally, Coffy acknowledged during cross examination that her company was fined in 2010 and 2011 by the State of Connecticut for not having worker's compensation insurance. (Transcript page 96.) The court does not view Coffy as credible and gives little to no weight to her testimony.
Count One alleges a cause of action for breach of contract for failure to pay the audit premium due under the policy provided by 4 Nurses. In order to recover on a breach of contract claim, the plaintiff must prove: (1) the formation of an agreement with the defendant; (2) that the plaintiff performed (his/her/its) obligations under the agreement; (3) that the defendant failed to perform (his/her/its) obligations under the agreement; and (4) as a result, the plaintiff sustained damages. See Keller v Beckenstein, 117 Conn.App. 550, 558, 979 A.2d 1055 cert. denied, 294 Conn. 913, 983 A.2d 274 (2009). Ryiz v. Federal Ins. Co., 5 Conn.App. 179, 182, 497 A.2d 1001 (1985).
In the present case, 4 Nurses breached its contract with the plaintiff and is liable as a matter of law. 4 Nurses completed the insurance application through its agent, Eagan, and obtained an insurance policy from the plaintiff. 4 Nurses unpersuasively attempted to elicit evidence that Eagan and Mitra, as agents of the plaintiff and acting on its behalf, had the authority to waive, or receive, notice of cancellation. (4 Nurses Exhibit C.) However, " [t]he general rule is that, where an insurance broker or agent is employed by a person to procure insurance for him, the broker or agent becomes his agent until the insurance is procured . . . but, after the insurance has been procured, he ceases to be the agent of the insured, and has no authority to waive or to receive notice of cancellation of the policies in behalf of the insured." Cheshire Brass Co. v. Wilson, 86 Conn. 551, 557, 86 A. 26 (1913).
The plaintiff performed its obligations under the policy by issuing a policy and by agreeing to be bound by the terms of the coverage, as well as, conducting an audit at the end of the term to determine the premiums owed. 4 Nurses expected to be covered by the policy in the event of a claim, but failed to pay based on the audit. Additionally, there was no evidence presented by 4 Nurses to refute that the audit figures were incorrect. 4 Nurses did not call any accountant or an expert witness to refute the audit. 4 Nurses' failure to pay following the audit constituted a breach of the policy.
4 Nurses argues that the plaintiff failed to show that the contract was executed between the parties. It asserts that the final amount due was in dispute, no evidence was put forward to show an executed contract existed, and there was no meeting of the minds,...
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