The insured plaintiffs filed a lawsuit against their insurer alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and unfair and deceptive practices in violation of the Connecticut Unfair Insurance Practices Act (“CUIPA”) as a result of the insurer’s denial of coverage for damage to the basement walls in the plaintiffs’ home. The insureds alleged that the insurer engaged in dishonest conduct intended to delay the response to plaintiffs’ insurance claim to create an “untimely filing” defense and thus bar any action against the insurer. The insurer moved to dismiss the bad faith and CUIPA counts.
The court granted the insurer’s motion to dismiss the CUIPA count. Although the court adopted the position of the Second Circuit Court of Appeals that there is no private right of action under CUIPA (an issue not yet decided by the Connecticut Supreme Court), the court also acknowledged that an insured can bring a private cause of action based on CUIPA under the Connecticut Unfair Trade Practices Act (“CUTPA”). However, to prove a violation of CUIPA through CUTPA, an insured must prove that the insurer’s unfair practices occurred with enough frequency to constitute a “general business practice.” Because the plaintiffs only alleged multiple instances of unfair conduct with regard to the handling of their own claim, rather than a general business practice of engaging in unfair insurance practices, the court dismissed the plaintiffs’ CUIPA/CUTPA count.
With regard to the plaintiffs’ breach of the covenant of good faith and fair dealing count, the court denied the insurer’s motion to dismiss because the plaintiffs’ allegation that they notified their insurer of their claim on March 11, 2008 but the insurer did not deny coverage until February 3, 2009 was sufficient to raise the claim above the speculative level.