Insurance Coverage: Court strikes three counts from plaintiff’s complaint due to improper misjoinder of claims that did not arise out of the same facts or transactions

The defendant, Pacific Specialty Insurance Company, filed a motion to strike counts one, two, and three of the plaintiffs’ revised complaint. Pacific Specialty contended that the claims therein were misjoined with the claims alleged in counts four and five against the individual co-defendants because the claims against the individual defendants do not arise out of the same transaction or set of operative facts. This case arose out of the purchase of a new home. The plaintiffs purchased a residential property from the individual defendants and during this process, the individual defendants furnished the plaintiffs with a written property disclosure report. The individual defendants represented that they were not aware of any problems with the well or water quality, quantity, or pressure and that the property did not have any basement water seepage/dampness. The plaintiffs alleged that these representations were false and despite an inspection of the property, they did not become aware of the problems with the property’s well or water quality nor the basement water seepage/dampness.

The plaintiffs subsequently discovered that the well water needed to be replaced, water was seeping down from the interior ceiling, and approximately one inch of standing water was present throughout the lower level of the property. The plaintiffs further alleged that they purchased a policy of homeowners insurance from Pacific Specialty for the policy period of August 14, 2020, to August 14, 2021. On or about August 14, 2021, the plaintiffs renewed the policy for an additional one-year term. The plaintiffs alleged that the policy was in full force and effect during the relevant time and that Pacific Specialty agreed to provide the plaintiffs with coverage for sudden and accidental direct physical loss to the property and to their personal property, unless specifically excepted or excluded by the policy. Pacific Specialty was made aware of the standing water and sent a representative to assess and photograph the water . The plaintiffs were then advised that Pacific Specialty would be denying coverage because the policy did not provide coverage for floods. Pacific Specialty further denied coverage for the seeping water in the ceiling as the policy excluded coverage for damages due to the failure of the sump pump or caused by surface water and/or ground water which seeps in through a building or foundation. The plaintiffs appealed this denial of coverage.

The plaintiffs alleged a breach of the contract against Pacific Specialty in count one, bad faith in count two  and a  violation of the Unfair Trade Practices Act in count three. The plaintiffs further alleged tort claims against the individual defendants in count four and five. In Pacific Specialty’s motion to strike, it argues that the claims against the individual defendants do not arise out of the same operative facts or the same transaction. Specifically, Pacific Specialty argues that the claims against the individual defendants are predicated on alleged misrepresentation in the property disclosure report in connection with the plaintiffs’ purchase of the property, while the claims against Pacific Specialty arise out of property damage occurring after the plaintiffs purchased the property. The plaintiffs argue in response that the State’s liberal approach to joinder and general policy favors the litigation of related controversies in one cause of action. There is a split of authority among trial courts as to the meaning of Connecticut Practice Book § 10-21 which requires that the causes of action “affect all the parties to the action.” A number of courts have adopted a strict interpretation and have held that there must be commonality between the parties to all the claims while other courts have concluded that “shall affect all the parties” does not require that all parties must be common to all the causes of action, but rather that “affect” only requires joined parties to have an interest in the outcome of each claim.

However, in this case, the court does not reach the split of authority issue because the plaintiffs’ claims were insufficient to support joinder under either interpretation. Even under the broad interpretation of the language, Pacific Specialty had no interest in the outcome of the claims against the individual defendants, and vice versa. The plaintiffs’ claims in counts one, two and three do not arise out of the same transaction or transactions connected with the same subject of action as counts four and five. The court then analyzes the injuries claimed and whether there is any connection between such injuries. The court finds only disparities in the claims. The plaintiffs’ claims against Pacific Specialty alleged injury to property caused by Pacific Specialty when they allegedly directed the plaintiffs not to remediate the water intrusion prior to an investigation and in the subsequent denial of coverage. In contrast, the plaintiffs did not allege any injury to property in the revised complaint caused by the individual defendants, but rather that the allegations are directed to misrepresentations made by the individual defendants in the disclosure report. Therefore, the court finds no similarity between the injuries allegedly caused by Pacific Specialty and the individual defendants.  The Superior Court grants Pacific Specialty’s motion to strike counts one, two and three of the plaintiff’s revised complaint. Champagne v. Pac. Specialty Ins. Co., HHB-CV23-6080417-S, 2024 WL 3342440 (Conn. Super. Ct. July 2, 2024)