Ensign Yachts, Inc v. Arrigoni et al
Filing
319
ORDER granting 210 Defendant Lloyds of London's Motion for Summary Judgment. See the attached Memorandum of Decision. The Clerk is directed to terminate Lloyds of London as a defendant to this case. Signed by Judge Vanessa L. Bryant on 7/15/11. (Engel, J.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
ENSIGN YACHTS, INC,
Plaintiff,
v.
JON ARRIGONI ET AL.,
Defendants.
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CIVIL ACTION NO.
3:09-cv-209 (VLB)
July 15, 2011
MEMORANDUM OF DECISION GRANTING DEFENDANT
LLOYDS OF LONDON’S MOTION FOR SUMMARY JUDGMENT [Doc. #210]
The plaintiff, Ensign Yachts, Inc. (“Ensign”) brought this action for
damages against the defendants, Jon Arrigoni (“Arrigoni”) and Arrigoni’s insurer
Lloyds of London (“Lloyds”).1 This case involves the transit of Ensign’s 2008 55'
Cigarette Super Yacht from New Jersey to Florida in December 2007 (the
“Yacht”). Ensign alleges that the Yacht was damaged during transit while in the
custody of Arrigoni as a result of Arrigoni’s negligence.
On March 11, 2010, the Court dismissed several causes of action asserted
by Ensign. [Doc. #110]. Ensign’s only surviving causes of action are a claim for
violation of the Carmack Amendment against Arrigoni, and claims for breach of
contract, breach of the covenant of good faith and faith dealing, bad faith, and
violation of the Connecticut Unfair Insurance Practices Act (“CUIPA”), Conn. Gen.
Stat. § 38a-816(1) (a so-called “CUIPA through CUTPA” claim). Lloyds now
moves for summary judgment with respect to all surviving claims against it on
1
Ensign also originally named as a defendant the Saperstein Agency, Inc
(“Saperstein”). However, all claims against Saperstein were dismissed with
prejudice pursuant to stipulation of the parties on July 2, 2010. [Doc. #156].
the basis that there is no enforceable contractual relationship between it and
Ensign [Doc. #210].2 For the reasons stated hereafter, Lloyds’s motion for
summary judgment is GRANTED.
I. FACTUAL BACKGROUND
The following facts relevant the instant motion, which are taken from the
parties’ Rule 56(a) Statements and supporting affidavits and exhibits, are
undisputed unless otherwise noted.
Arrigoni owned and operated a sole proprietorship overland boat hauling
business operating under the name Arrigoni Marine Movers. Def. 56(a)(1)
Statement [Doc. #211] ¶ 1. Saperstein, a Connecticut insurance agency, was
Arrigoni’s insurance agent in connection with the procurement of cargo liability
insurance. Id. ¶ 2. In early October 2007, Saperstein obtained on behalf of
Arrigoni motor truck cargo insurance in the total amount of $1 million through
policies issued by Lloyds with effective dates of October 20, 2007 through
October 20, 2008 (the “operative policies”). Id. ¶¶ 4, 12. The operative policies
were not issued for any particular transport, but rather were issued in connection
with the usual course of conduct of Arrigoni’s boat hauling business. Id. Policy
number R704230/112 covered the first $250,000 and last $250,000 in loss, while
policy number R704390/010 covered between $250,000 and $750,000 in loss.
2
Ensign’s motion for summary judgment against Arrigoni on its Carmack
Amendment claim [Doc. #228], and Ensign and third-party defendant/crossdefendant James Ross’s motion for summary judgment with respect to Arrigoni’s
and Lloyds’s fraud claims [Doc. #224], will be addressed in a separate
memorandum of decision.
2
Cirrincione Dec., Exh. A [Doc. #211-4]. By their terms, the operative policies
indemnify Arrigoni and his business for “their legal liability as common carriers
for loss of or damage to merchandise” of others while in transport or temporary
storage in the course of transit. Id. The operative policies contain no reference
to the rights of any third party beneficiary and make no mention of any procedure
to add a third party as an additional insured. Id.
The operative policies were obtained by Saperstein through a solicitation
made to Inter Insurance Agency (“Inter Insurance”), a wholesale insurance broker
that represents various insurance companies including Lloyds. Def. 56(a)(1)
Statement [Doc. #211] ¶ 6. Saperstein had a formal agency agreement with Inter
Insurance Agency, but had no relationship with Lloyds whatsoever. Id. ¶¶ 7-8. In
fact, Saperstein never had any direct dealings with Lloyds at any time for any
purpose. Id. ¶ 9.
The insurance issued through Lloyds was underwritten by The Kiln Group,
Limited (the “Kiln Group”), a corporation registered in England operating as an
underwriting syndicate affiliated with Lloyds. Id. ¶ 13. In the United States, the
Kiln Group is registered as syndicate 510. Id. Ensign claims that Lloyds is not
licensed to issue insurance in Connecticut. However, Lloyds has presented proof
that, at all times relevant to this action, syndicate 510 and Lloyds were authorized
and registered to issue surplus lines of insurance in Connecticut, including the
policies at issue in this case. Id. ¶ 14.
In early December 2007, Ensign, through its president James Ross
(“Ross”), first contacted Arrigoni regarding possible transport of the Yacht to
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Florida. Id. ¶ 15. At that time, Ross asked whether Arrigoni had insurance
coverage, to which Arrigoni responded that he had $1 million in cargo coverage.
Id. ¶ 16. Thereafter, but still in early December 2007, an agreement was entered
whereby Arrigoni agreed to transport the Yacht from New Jersey to Florida for
$11,500 to be paid by Ensign. Id. ¶ 17.
On December 14, 2007, during transport to Florida the Yacht became
dislodged from Arrigoni’s trailer, causing it to strike the roadway and resulting in
physical damage to the propeller shaft and other engine parts. Id. ¶ 18. As a
result of the damage to the Yacht, Ensign sought recovery initially from Arrigoni
and then directly from Lloyds. However, Ensign had no communication with
Lloyds prior to the Yacht being damaged. Id. ¶ 23.
Ensign admits that it had no direct contact with Lloyds prior to the loss on
December 14, 2007. Pl. 56(a)(2) Statement [Doc. #273] ¶ 23. Ensign claims,
however, that Ross requested that Arrigoni have Ensign named as an additional
insured on his insurance policies because Ensign’s Marine Insurance Policy did
not cover overland transit of the Yacht beyond 250 miles. Id. ¶ 16. Ross testified
that he asked Arrigoni for proof that Ensign had been named as an additional
insured on his policies several times, both before he loaded the Yacht for
transport and during transit. Ross Dep. [Doc. #211-6] at 124-25, 144-45. Arrigoni
assured him that it “was done,” but told him that he could not send him
verification because he was on the road. Id. Ross further testified that he called
Saperstein to obtain verification, but that Saperstein told him he would have to
speak with Arrigoni. Id. at 144-45.
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Three days after the Yacht was damaged, on December 17, 2007,
Saperstein issued a Certificate of Liability Insurance (the “Certificate”) listing the
operative policies issued by Lloyds to Arrigoni and naming Ensign’s predecessor
in interest Cigarette Racing Team (“Cigarette”) as the “certificate holder.” Def.
56(a)(1) Statement [Doc. #211] ¶ 19. The Certificate lists “Arrigoni dba Arrigoni
Marine Movers” as the “insured.” Def. Exh. A [Doc. #211-8]. The Certificate
expressly states that it is being issued “as a matter of information only and
confers no rights upon the certificate holder” and that it “does not amend, extend
or alter the coverage afforded” by the operative policies. Id. Nevertheless,
Ensign contends that it believed that the Certificate reflected its agreement with
Arrigoni to have Ensign named as an additional insured on the operative policies.
Pl. 56(a)(2) Statement [Doc. #273] ¶ 20.
Arrigoni testified, however, that he never actually asked Saperstein or
anyone else to make Ensign a named or additional insured under the operative
policies, nor did he ever request that Lloyds assume a direct obligation to Ensign.
Def. 56(a)(1) Statement [Doc. #211] ¶¶ 21-22. Similarly, Saperstein’s owner
testified that he had no knowledge of and was unaware of any documentation
suggesting that a request to add Ensign as an additional insured on the operative
policies was ever made. Saperstein Dep. [Doc. #211-2] at 122. Finally, Inter
Insurance, Lloyds’s wholesale broker, never received any request to add Ensign
or any other party as an additional insured on the operative policies. Cirrincione
Dec. [Doc. #211-3] ¶¶ 10-12.
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II. STANDARD OF REVIEW
Summary judgment should be granted “if the movant shows that there is
no genuine dispute as to any material fact and that the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). The Court “construe[s] the
evidence in the light most favorable to the non-moving party and . . . draw[s] all
reasonable inferences in its favor.” Huminski v. Corsones, 396 F.3d 53, 69-70 (2d
Cir. 2004). “[I]f there is any evidence in the record that could reasonably support
a jury’s verdict for the non-moving party, summary judgment must be denied.”
Am. Home Assurance Co. v. Hapag Lloyd Container Linie, GmbH, 446 F.3d 313,
315 (2d Cir. 2006) (internal quotation marks omitted). “The moving party bears
the burden of showing that he or she is entitled to summary judgment.”
Huminski, 396 F.3d at 69. “[T]he burden on the moving party may be discharged
by ‘showing’—that is pointing out to the district court—that there is an absence
of evidence to support the nonmoving party’s case.” PepsiCo, Inc. v. Coca-Cola
Co., 315 F.3d 101, 105 (2d Cir. 2002). “If the party moving for summary judgment
demonstrates the absence of any genuine issue as to all material facts, the
nonmoving party must, to defeat summary judgment, come forward with evidence
that would be sufficient to support a jury verdict in its favor.” Burt Rigid Box, Inc.
v. Travelers Prop. Cas. Corp., 302 F.3d 83, 91 (2d Cir. 2002).
III. DISCUSSION
Ensign’s claims against Lloyds for breach of contract, breach of the
covenant of good faith and faith dealing, bad faith, and violation of Connecticut
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General States § 38a-816(1) (“CUIPA through CUTPA”) all rely upon the existence
of a contractual obligation on the part of Lloyds to Ensign. On March 11, 2010,
the Court issued a Memorandum of Decision on Lloyds’s motion to dismiss
holding that although Ensign failed to state a claim upon which relief could be
granted on any breach of a direct contractual relationship, the issue of whether
Ensign was a third party beneficiary of the insurance contract between Arrigoni
and Lloyds could not be resolved on the pleadings. [Doc. #110] at 19-21; Ensign
Yachts, Inc. v. Arrigoni, No. 3:09-cv-209 (VLB), 2010 WL 918107, at *9-11 (D. Conn.
Mar. 11, 2010). Since under Connecticut law a third party beneficiary may enforce
a contractual obligation without being in privity with the actual parties to the
contract, the Court declined to dismiss these claims at the motion to dismiss
stage, reserving the issue for summary judgment upon a fully developed factual
record. Id. Thus, the sole issue for the Court to decide in resolving the instant
motion is whether Ensign was a third party beneficiary of the insurance policies
issued by Lloyds to Arrigoni.
It is well-settled that “the ultimate test to be applied [in determining
whether a person has a right of action as a third party beneficiary] is whether the
[mutual] intent of the parties to the contract was that the promisor should assume
a direct obligation to the third party [beneficiary] and . . . that intent is to be
determined from the terms of the contract read in the light of the circumstances
attending its making[.]” Pelletier v. Sordoni/Skanska Construction Co., 264 Conn.
509, 531 (2003) (quoting Grigerik v. Sharpe, 247 Conn. 293, 311-12 (1998)).
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“Although . . . it is not in all instances necessary that there be express language
in the contract creating a direct obligation to the claimed third party beneficiary . .
. the only way a contract could create a direct obligation between a promisor and
a third party beneficiary would have to be . . . because the parties to the contract
so intended.” Gazo v. City of Stamford, 255 Conn. 245, 261 (2001). “The mere
fact that a contract of liability insurance exists between the tortfeasor and
insurance company does not somehow make the injured party a third-party
beneficiary to the contract.” Alexander v. W.F. Shuck Petroleum Co., No.
HHBCV085010050, 2009 WL 2783587, at *4 (Conn. Super. Ct. Aug. 3, 2009).
In this case, the operative policies were entered into by Arrigoni and Lloyds
no later than October 20, 2007. The operative policies insured Arrigoni for losses
occurring in the normal course of his boat hauling business, and made no
mention of any third party beneficiary rights. Ross first contacted Arrigoni
regarding possible transport of the Yacht in early December 2007. Therefore,
neither Arrigoni nor Lloyds could have intended to make Ensign a third party
beneficiary of the operative policies when they were created.
Ensign argues that, even though it may not have been a third party
beneficiary of the operative policies at the time they were created, it was later
added to the policies as an additional insured. Ensign relies upon the following
evidence in support of this theory. Ross testified that he asked Arrigoni to have
Ensign named as an additional insured on his policies because Ensign’s
insurance did not cover overland transit of the Yacht beyond 250 miles. Ross
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claimed that he asked Arrigoni for proof that Ensign had been named as an
additional insured on several occasions, both before he loaded the Yacht for
transport and during transit. Arrigoni assured Ross that he had done so, but
stated that he could not provide verification because he was on the road. Ross
also contacted Saperstein directly on one occasion, but Saperstein told him he
would have to speak with Arrigoni. On December 17, 2007, three days after the
Yacht was damaged during transit, Saperstein issued the Certificate listing the
operative policies issued by Lloyds to Arrigoni and naming Cigarette, Ensign’s
predecessor in interest, as the “certificate holder.” Ross understood the
Certificate to mean that Ensign had been named as an additional insured on the
operative policies, as Arrigoni had agreed to do, despite the disclaimer contained
in the Certificate.
The Court holds that the evidence submitted by Ensign is insufficient to
raise a triable issue of material fact as to the existence of a third party beneficiary
relationship. Although Ross repeatedly asked Arrigoni to have Ensign added as
an additional insured on his policies, Arrigoni testified that he never actually did
so. Saperstein, Arrigoni’s insurance agent, has no knowledge or records
documenting that any request to add Ensign to the operatives policies was ever
made. Inter Insurance, Lloyds’s wholesale broker, also never received any
request to add Ensign or any other party as an additional insured on the operative
policies. The Certificate, which was not issued until three days after the Yacht
was damaged, does not state that Cigarette or Ensign is an additional insured.
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Finally, Ensign admits that it had no contact with Lloyds before the Yacht was
damaged during transport on December 14, 2007. Therefore, there is no evidence
that Lloyds was even aware of Ensign’s existence prior to the damage occurring,
much less that Lloyds intended to grant Ensign third party beneficiary rights
under the operative policies.
While Ross may have believed that the Certificate evidenced his agreement
with Arrigoni to have Ensign added as an insured under the operative policies,
his unilateral belief is insufficient. The mutual intent of both parties to a contract
that a promisor assume a direct obligation to a third party is necessary in order to
confer a right of action as a third party beneficiary. See Pelletier, 264 Conn. at
531. The rationale for this rule rests on the policy of certainty in enforcing
contracts. As the Connecticut Supreme Court has explained:
[E]ach party to a contract is entitled to know the scope of his or her
obligations thereunder. That necessarily includes the range of
potential third persons who may enforce the terms of the contract.
Rooting the range of potential third parties in the intention of both
parties, rather than in the intent of just one of the parties, is a sensible
way of minimizing the risk that a contracting party will be held liable to
one whom he neither knew, nor legitimately could be held to know,
would ultimately be his contract obligee.
Grigerik, 247 Conn. at 312. Thus, even if Arrigoni agreed to add Ensign to the
operative policies as an insured, Ensign cannot assert a right as a third party
beneficiary under those policies because there is no evidence that Lloyds, the
other party to the insurance contract, ever agreed to assume a direct obligation to
Ensign.
Moreover, it is undisputed that the Certificate was issued on December 17,
10
2007, three days after the Yacht was damaged during transport by Arrigoni.
Thus, even if it is assumed that the Certificate did extend insurance coverage to
Ensign when it was issued, Ensign still could not sustain its claims against
Lloyds because such coverage would only apply to the Yacht in its already
damaged condition.
Accordingly, there is no reasonable view of the evidence whereby Ensign
could be considered a third party beneficiary of the operative policies between
Arrigoni and Lloyds, and thus there is no enforceable contractual obligation
between Ensign and Lloyds, which defeats Ensign’s breach of contract claim.
The absence of a contractual obligation between Ensign and Lloyds is also
fatal to the remaining claims of breach of the covenant of good faith and fair
dealing, bad faith, and violation of “CUIPA through CUTPA.” “[T]he existence of
a contract between the parties is a necessary antecedent to any claim of breach
of the duty of good faith and fair dealing.” Macomber v. Travelers Prop. and Cas.
Corp., 261 Conn. 620, 638 (2002). Likewise, there can be no legally viable claim
for bad faith in the absence of a contractual obligation between the parties. See
Carford v. Empire Fire and Marine Ins. Co., 94 Conn. App. 41, 45-47 (2005).
Finally, the absence of a contractual obligation defeats Ensign’s “CUIPA through
CUTPA” claim as well. Id. at 53 (holding that “the right to assert a private cause
of action for CUIPA violations through CUTPA does not extend to third parties
absent subrogation or a judicial determination of the insured’s liability”).
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IV. CONCLUSION
Based on the above reasoning, Lloyds’s motion for summary judgment is
GRANTED. Since all claims against Lloyds have now been dismissed, the Clerk
is directed to terminate Lloyds as a defendant to this action.
IT IS SO ORDERED.
/s/
Vanessa L. Bryant
United States District Judge
Dated at Hartford, Connecticut: July 15, 2011.
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