Zieba v. Middlesex Mut. Assur. Co.

• Citation: 549 F. Supp. 1318
• Decision Date: 02 November 1982
• Docket Number: Civ. A. No. B-81-286.
• Court: U.S. District Court — District of Connecticut
• Parties: Zygmunt ZIEBA and Lucy Zieba, Plaintiffs, v. MIDDLESEX MUTUAL ASSURANCE COMPANY, Defendant.

549 F. Supp. 1318

Zygmunt ZIEBA and Lucy Zieba, Plaintiffs, v. MIDDLESEX MUTUAL ASSURANCE COMPANY, Defendant.

Civ. A. No. B-81-286.

United States District Court, D. Connecticut.

November 2, 1982.

Alan Neigher, Byelas & Neigher, Westport, Conn., for plaintiffs.

John E. Tener, Robinson, Robinson & Cole, Hartford, Conn., for defendant.

RULING ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

ZAMPANO, District Judge.

In this diversity action the plaintiffs, who were insured under a policy issued by defendant, seek to recover damages for destruction of their property by fire in their Florida condominium. Defendant, Middlesex Mutual Assurance Company ("Middlesex"), moves for summary judgment. Fed. R.Civ.P. 56.

I. FACTS

The basic facts are not in dispute. In Connecticut on December 28, 1978, plaintiffs, Zygmunt and Lucy Zieba, purchased a homeowner's insurance policy from Middlesex, effective for one year, insuring property in their home or any new principal residence against loss from certain perils including fire. On July 31, 1979, the plaintiffs took title to a condominium in Fort Lauderdale, Florida, and moved many of their possessions into their new home on that date. In the early hours of the next day, while the plaintiffs were away, fire destroyed the condominium and its contents. Investigation by police revealed that the cause of the fire was arson.

The policy in question required that the insureds give "immediate" notice of a loss to the insurer, furnish the insurer with a proof of loss "within sixty days after the loss," and commence a suit on the policy "within twelve months next after inception of the loss."

The plaintiffs orally notified their insurance agent of their property loss on August 10, 1979. He, in turn, reported the loss to Middlesex three days later. The following week, the plaintiffs retained a private adjusting company to assist them in their claim against Middlesex. On August 20th, a Middlesex investigator contacted the plaintiffs and they referred him to their private adjuster. By letter dated August 28th, the investigator for the insurance company requested that a schedule of contents form be executed and that an interview be arranged. The letter contained a non-waiver provision and, in addition, the plaintiff's signed a non-waiver agreement. A month later, Mr. Zieba gave the insurer a short statement under oath. On October 2nd, the plaintiffs were reminded in writing that certain documents including the schedule of contents had not been received by the insurer. On October 28th, the plaintiffs were again requested to file the schedule of contents and other documents with respect to the fire loss. Apparently, on or about November 19th, the plaintiffs submitted a "list" of property destroyed. In December, a rather detailed document was received by the insurer which the plaintiffs assumed was an adequate proof of loss. On January 18, 1980, Mr. Zieba was questioned at length under oath by the insurer's representative concerning the claim.

On January 25, 1980, the insurer sent a certified letter to plaintiffs informing them that the purported proof of loss was being returned and that the company was "expressly rejecting it as a proper proof of loss since it does not comply with the policy provisions." The explanations given were that 1) the proof of loss was not timely filed and 2) the document was defective because it did not "set out the actual cash value" of the property. In addition, the plaintiffs were notified that the company reserved all its rights and defenses under the policy.

There is no indication in the pleadings, the exhibits, or in the comprehensive briefs addressed to defendant's motion that the parties had any further contact with each other until November 20, 1980, when the plaintiffs instituted an action against Middlesex in the State of Florida. The suit was dismissed for lack of jurisdiction. The instant action was commenced in this District on June 25, 1981, and the requested relief is grounded on breach of contract, a violation of the implied covenant of good faith and fair dealing, common law deceit, and breach of fiduciary duties.

II. ISSUES

Defendant contends there is no genuine issue of material fact and that as a matter of law judgment should enter in its favor. Specifically, it asserts that the plaintiffs did not give due notice of loss, failed to file a timely proof of loss, and did not commence suit within the time limits set forth in the policy.

Plaintiffs argue that the defendant must demonstrate prejudice before the plaintiffs' delays can bar this action, that the question of waiver and estoppel effectively proscribes the grant of summary judgment, that Connecticut's six year statute of limitations pertaining to written contracts governs their claim, and that even if the breach of contract count is dismissed, the remaining causes of action in tort survive.

It is agreed that Connecticut law controls the resolution of these issues. See Klaxon v. Stentor Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941); Guardian Life Ins. Co. v. Robitaille, 495 F.2d 890, 894 n. 7 (2 Cir.1974); Jenkins v. Indemnity Ins. Co., 152 Conn. 249, 253, 205 A.2d 780, 782-83 (1964).

III. NOTICE AND PROOF OF LOSS

It is uncontroverted that the plaintiffs submitted neither the notice of loss "immediately" nor the proof of loss within sixty days after loss. Defendant contends these provisions in the policy are conditions precedent to the contract of insurance, the violations of which void coverage even in the absence of prejudice. Plaintiffs argue that they "substantially" complied with the requirements contained in the policy and that prejudice must be demonstrated by defendant in order for delays to be valid defenses to liability.

The notice and proof of loss provisions in a policy, which usually can readily be complied with by an insured, are necessary conditions for the protection of the insurance company. An insurer must have a reasonable opportunity to investigate, to assess the scope of the loss, to estimate its rights and liabilities, and to prevent fraud and collusion. Arton v. Liberty Mut. Ins. Co., 163 Conn. 127, 132, 302 A.2d 284, 288 (1972); Chauser v. Niagara Fire Ins. Co., 123 Conn. 413, 423, 196 A. 137, 141 (1937); Rochon v. Preferred Accident Ins. Co., 118 Conn. 190, 197, 171 A. 429, 432 (1934).

On the other hand, Connecticut courts have recognized the need to shelter an insured from the harsh consequences of a rigid allegiance to the time provisions in a policy. Justice mandates that an insurer should not escape a liability it has expressly undertaken on overly technical grounds. To balance the competing interests of the insurer and the insured, Connecticut courts have fashioned a series of exemptions from the strict application of the "condition precedent" principles of contract law in late notice situations. In addition to the doctrines of waiver and estoppel, see, e.g., Curran v. Connecticut Indem. Co., 127 Conn. 692, 695, 20 A.2d 87, 89 (1941), terms such as "immediate notice" are construed to mean and require that reasonable notice be given under the circumstances. West Haven v. United States Fidelity & Guar. Co., 174 Conn. 392, 397, 389 A.2d 741, 745 (1978); Baker v. Metropolitan Casualty Ins. Co., 118 Conn. 147, 149, 171 A. 7, 9 (1934). Moreover, immaterial or unsubstantial failures to comply with notice stipulations do not constitute a fatal breach. Curran, 127 Conn. at 696, 20 A.2d at 89.

Some states grant an insured increased protection against a strict contractual interpretation of notice provisions by requiring the insurer to prove that prejudice resulted from an insured's technical failures. See, e.g., Northwestern Title Sec. Co. v. Flack, 6 Cal.App.3d 134, 141, 85 Cal.Rptr. 693, 696-97 (Ct.App.1970); Henderson v. Hawkeye-Security Ins. Co., 252 Iowa 97, 106 N.W.2d 86 (1960); Cooper v. Government Employees Ins. Co., 51 N.J. 86, 90, 237 A.2d 870, 874 (1968).

Connecticut ostensibly has rejected the "prejudice" approach in notice cases. Employers' Liability Assurance Corp. v. Travelers Ins. Co., 411 F.2d 862, 866 (2 Cir.1969) (under Connecticut law, an insured's failure to comply with the notice provisions "voids coverage, even in the absence of prejudice"). See also Preferred Accident Ins. Co. v. Costellano, 148 F.2d 761, 762 (2 Cir.1945); Lee v. Casualty Co., 90 Conn. 202, 205, 96 A. 952, 953-54 (1916). Nevertheless, it is important to note that Connecticut judges have employed the "test" of prejudice to determine whether a notice delay is immaterial and unsubstantial. See, e.g., Arton, 163 Conn. at 133-34, 302 A.2d at 288; Curran, 127 Conn. at 696, 20 A.2d at 89. Indeed, in a recent case, a Connecticut Superior Court judge ruled that an insurer must show prejudice from a late notice to be relieved of liability. On appeal, the Connecticut Supreme Court, reversing on other grounds, did not reach the issue. However, two justices in dissent stressed that no sound reason, in logic or equity, exists for the Connecticut rule and urged that this state follow the "clear trend of the law" and adopt the prejudice requirement. Plasticrete Corp. v. American Policyholders Ins. Co., ___ Conn. ___, 439 A.2d 968 (Sup.Ct. 1981).

Applying these principles to the facts of the case sub judice, the Court is of the opinion that a triable factual question is present concerning the notice of loss issue. The plaintiffs, absent a separate bar to the action, are entitled to prove that they gave notice of the fire to Middlesex within a reasonable time under the circumstances. With respect to the delayed submission of the proof of loss, there is no doubt that Middlesex neither waived the timely filing nor is estopped by any behavior on its part from this defense. However, it has not accepted the burden of demonstrating prejudice at this stage of the proceedings. In excess of caution, in view of Connecticut's developing law on the requirement of prejudice...