Pine Orchard Yacht & Country Club, Inc. v. Sinclair Insurance Group, Inc.

• Decision Date: 12 June 2017
• Docket Number: CV126032519
• Court: Connecticut Superior Court
• Parties: Pine Orchard Yacht and Country Club, Inc. v. Sinclair Insurance Group, Inc.

Pine Orchard Yacht and Country Club, Inc. v. Sinclair Insurance Group, Inc.

No. CV126032519

Superior Court of Connecticut, Judicial District of New Haven, New Haven

June 12, 2017

UNPUBLISHED OPINION

MEMORANDUM OF DECISION

Thomas Corradino, Judge

The court will first discuss the factual allegations involved in this case and the legal claims raised. Certain aspects of the underlying factual background to the claim being made in this case are not disputed. The Pine Orchard Yacht and Country Club, Inc. (the Club) is located on land bordering the ocean. Buildings on the property include the clubhouse and several other buildings. The club contacted the defendant Sinclair Insurance Group Inc. for the purpose of obtaining flood insurance, Sinclair did procure a Natural Catastrophe Insurance, Program Commercial Insurance Certificate bearing Policy Number CNC1P206612-6 at an annual premium of $13 555.00. On August 28, 2011 a major storm occurred causing a loss to all its buildings and the contents of those buildings. A claim was made for these losses but the insurer only permitted coverage for flood damage to the club house. In the plaintiff's post-trial brief and in the Joint Trial Management Report the plaintiff claims, as the report indicates that Sinclair " breached its contract by obtaining flood insurance which only covered the building and contents at its club house building, but which did not cover its other buildings, the contents of the other buildings or its land. The plaintiff claims (Sinclair) failed to obtain a policy of insurance properly written to protect the property as the plaintiff (Club) requested and as the (Club) should have been provided with in the proper discharge of the defendant's (Sinclair's) duties. The plaintiff (Club) alleges that it sustained uninsured losses to its property in the wake of Hurricane Irene in August 2011 as a result of the defendant's breach of contract." Thus as said in the plaintiff's post-trial brief: " The plaintiff alleges that the defendant (Sinclair) breached a contract to obtain a specifically requested coverage (flood insurance for all buildings and the contents located therein) and breached its duty of care when obtaining coverage." The revised complaint in count four is entitled " Breach of Contract as to Sinclair Insurance Agency" and states:

3. On or before April 4, 2011, the plaintiff contacted the defendant, Sinclair Insurance Group, Inc., for the purposes of procuring flood insurance on its building, land, personal property and other holdings in Branford, Connecticut.

4. The plaintiff in doing such sought the advice and assistance and expertise of the defendant to procure for the plaintiff the proper insurance that in the event of loss due to flood all of their buildings, premises and other incidental property would be covered for the loss by flood.

5. The defendant procured a Natural Catastrophe Insurance Program Commercial Insurance Certificate bearing Policy Number CNCIP206612-6 at an annual premium of $13, 555.00.

6. The defendant, Sinclair Insurance Group, Inc., through its President, David N. Sinclair, is or should have been familiar with the insurance needs to protect the Plaintiff from damage and to provide insurance policies that properly and fully provided coverage for flood loss sustained by the property the plaintiff sought to insure.

7. On August 28, 2011, the plaintiff suffered a loss to its buildings and contents located herein.

8. The aforesaid policy of insurance was in full force and effect at the time of the losses sustained.

9. The Natural Catastrophe Insurance Program with its coverage underwritten by LLOYDS has declined to cover a portion of the plaintiff's losses.

10. LLOYDS has asserted that information provided to them by Sinclair Agency was either inaccurate or improper and therefore part of the plaintiff's losses are not covered.

The defendant in the Joint Trial Management Report denies that it breached any contract with the plaintiff but states " it obtained the specific insurance which the plaintiff (club) requested, which was flood insurance covering the club house and its contents, and that such insurance provided the full coverage which plaintiff purchased from the defendant. The defendant maintains that it was not asked to procure, and did not undertake to procure, insurance for plaintiff's (club's) other buildings, contents, or land.

(A)

The court will now discuss some of the legal issues presented by the facts and claims raised by the parties. It will then try to apply that discussion to the facts of this case in order to evaluate the validity of the claims being made.

(i)

(a)

As said in Shetucket Plumbing Supply Inc. v. SCS Agency Inc . 570 F.Supp.2d 282, 287 (2008): " Under Connecticut law, an action against an insurance broker for failure to procure insurance may be based on negligence or breach of contract . . . a breach of contract claim differs from a negligence claim in that it is based on a failure to perform a specific agreement . . . Here, plaintiff's breach of contract claim differs from their negligence claim in that it is based on defendant's failure to procure a policy providing blanket replacement cost coverage for all of plaintiff's properties. To prevail on the breach of contract claim, the plaintiffs have the burden of proving that the defendants promised to procure such a policy." (See also Ursini v. Goldman, 118 Conn. 554, 559-560 173 A. 789 (1934).)

Earlier in the opinion the court said negligence rests on finding of a duty, breach of that duty, causation and injury. The court said that " the plaintiffs claim that defendants owed them a duty to use reasonable care to procure the coverage called for by the insurance proposal and binder and to provide prompt notice if they were unable to do so." Id. pp 285-86, of R& B Auto Center Inc. v Farmers Group Inc., 140 Cal.App.4th 327, 337, 44 Cal.Rptr.3d 426 (2000), cited in statement of the general law on this issue in § 154 of the 43 Am.Jur.2d article on insurance at page 208. As noted in Couch On Insurance Volume 3 page 435: " an agent or broker is liable to his or her principle if by his or her fault or neglect the agent or broker fails to procure or renew insurance as the agent has contracted to do and as a result of the want of insurance, the principal suffers a loss. Liability exists for breach of contract or for a tort in negligently failing to perform a duty imposed by contract." See Bedessee Imports Inc. v. Cook, Hall &amp Hyde Inc., 847 N.Y.S.2d 151, 153, 45 A.D.3d 792 (2007); Broad v. Randy Bauer Insurance Agency, 275 Neb. 788 749 N.W.2d 478, 483 (Neb., 2008); also see 43 Am.Jur.2d article on insurance at section 150, pp. 201-02 citing among other cases, Casas v. Farmers Ins. Exchange, 35 Kan.App.2d 223, 130 P.3d 1201, 1207 (Kan.App. 2005).^[1]

However, it is a truism to say as Couch does in Volume 3, § 46: 65, page 46-190 that: " In the absence of any agreement or contract to effect, maintain, or renew insurance, no duty to do so arises." Referring to Couch and another treatise Avery v. Diedrich, 2007 WI 80, 301 Wis.2d 693, 734 N.W.2d 159 (Wis. 2007), held that Wisconsin and other jurisdictions hold that " an insurance agent does not have a duty to procure requested insurance coverage until there is an agreement that the agent will do so, " id. pg. 167.

Furthermore, the case of Sloan v. Wells, 251 S.E.2d 449, 296 N.C. 570 (1979), defines the nature of the request if it is to be a predicate for contract formation: " Obviously, liability for failure to procure insurance could not arise unless the agent had sufficiently definite directions from his principle to enable him to consummate the final insurance contract. Perhaps ordinarily the broker and his client expressly agree to all of the essential elements which are to be included in the final insurance contract. But such an express agreement is not necessary; the scope of the risk, the subject matter to be covered, the duration of the insurance and the other elements can be found by implication."

The court will now discuss four other cases which amplify and further define the ambit and nature of an insurance agent's contractual obligations and when they are incurred.

In Loevner v. Sullivan & Strauss Agency Inc. et al., 35 A.D.3d 392, 825 N.Y.S.2d 145 (2006), the plaintiff owned a boat on which he had insurance. He sued the agent who had sold him an umbrella liability policy for contract violation since the agent did not inform him to get additional insurance for the boat prior to an accident involving the boat. The court repeated the basic law in this area saying: " An insurance agent or broker has a common law duty to obtain requested coverage for a client within a reasonable amount of time or to inform the client of the inability to do so . . . Thus the duty is defined by the nature of the client's request . . . Absent a specific request for coverage not already in a client's policy or the existence of a special relationship with the client, an insurance agent or broker has no continuing duty to advise, guide, or direct a client to obtain additional coverage." This observation led the court to reverse denial of summary judgment against the agent Whitman Ltd., who sold the umbrella policy to the plaintiff. The plaintiff also sued the agent who provided the basic insurance for the boat, the Sullivan Agency. The court also reversed the failure to grant this defendant's summary judgment motion. It held that although the application for insurance noted the plaintiff had an umbrella policy he only requested the minimum level of liability coverage. The court held Sullivan was only obligated to procure the specific coverage requested and there was no evidence that the plaintiff asked...