CUTPA Claim vs. Bad Faith in Insurance: Pleading Standards

The plaintiff sued her insurers based on a policy which she alleges provides protection for certain losses. In consideration of the premium reserved in the policy and paid by the plaintiff, the defendants issued a contract of insurance, insuring the plaintiff against loss to the subject property. On or about February 23, 2024, the plaintiff suffered losses claimed to be compensable under the terms of the insurance contract, specifically losses resulting from a water pipe leak at the subject premises. The plaintiff filed a claim for the loss and damages which the defendants denied. As a result of the defendants’ failure to pay, the plaintiff commended this action, alleging breach of contract, breach of the implied duty of good faith and fair dealing, and violation of the Connecticut Unfair Trade Practices Act (CUTPA).

Superior Court on CUTPA Claims vs. Bad Faith in Insurance Disputes

The defendants seek to strike the second and third counts of the plaintiff’s complaint on the grounds that those claims are not legally sufficient. The plaintiff objects. To establish a CUTPA violation in the context of an insurance policy, the plaintiff generally must establish that the wrong about which the plaintiff is complaining is a “practice” rather than an isolated event. There is variability in the approach taken by trial courts with respect to the level of specificity required in a complaint to satisfy the requirement that the conduct claimed to be a “practice” is a practice, rather than an isolated event. Requiring a high level of specificity of prior incidents seemingly imposes an unreasonable burden on the claimant; however, not requiring specific instances of a past practice is tantamount to no pleading requirement other than a conclusory statement. The court cites a hybrid approach used in an earlier case and provides that it must be able to reasonably infer that if the insurance company committed this misconduct against the plaintiff, they are likely to commit it regularly against other claimants as well. In other words, even if a plaintiff cannot plead specific instances of similar prior misconduct by the insurer, circumstantial evidence of a general business practice derived from the insurer’s handling of the plaintiff’s isolated claim is sufficient to withstand a motion to strike. However, in this case, the court finds that the plaintiff’s complaint does not assert or attempt to assert prior instances of violations relevant to this case and does not provide any factual allegations from which it might be inferred that there is an improper practice behind the denial.

Pleading Requirements for Insurance Misconduct Allegations

Most of the allegations seem to rely upon the existence of a denial of the claim and the plaintiff’s objection to the motion to strike relies solely on the contention that the claim was denied. More than dissatisfaction with a denial of a claim is required to establish bad faith and/or an unfair insurance practice. The court uses this as a segue into the plaintiff’s claim for breach of the implied covenant of good faith and fair dealing. To establish a violation of the covenant of good faith and fair dealing, a general practice is not required, only conduct that frustrates the reasonable expectations of the other party to a specific contract. The plaintiff complains about the ultimate contractual obligation to pay covered claims and the defendants’ apparent denial of any duty to so perform. Without any reference to any specified reason for denial, the court questions how it is to be determined or determinable whether the reason for the denial was pretextual or in bad faith or otherwise “improper.” However, in connection with a motion to strike, the court does not have facts being presented in an evidentiary sense and must give the non-moving party the benefit or all reasonable favorable inferences. Further, the court must consider evidence reasonably capable of being presented under the allegations of the operative pleading. The court therefore cannot rule out some level of bad faith in the allegations of the plaintiff’s complaint at this time. The court grants the defendants’ motion to strike as to the plaintiff’s claimed violation of CUTPA but denies the motion to strike as to the plaintiff’s claim asserting a violation of the implied covenant of good faith and fair dealing. Smith V. Am. Strategic Ins. Corp., No. FBT-CV24-6137594-S, 2025 WL 1039812 (Conn. Super. Ct. Apr. 1, 2025)