Northeast Builders Supply & Home Centers, LLC v. Member Insurance Agency, Inc. et al

Filing 126

ORDER granting 122 Motion for Reconsideration. Signed by Judge Warren W. Eginton on 7/12/19. (Ladd-Smith, I.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
NORTHEAST BUILDERS SUPPLY
& HOME CENTERS, LLC,
Plaintiff,
v.
MEMBER INSURANCE AGENCY, INC.,
and
PENNSYLVANIA LUMBERMENS
MUTUAL INSURANCE COMPANY,
Defendants.

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3:15-cv-00549-WWE

MEMORANDUM OF DECISION
ON PLAINTIFF’S MOTION FOR RECONSIDERATION
This is an action by an insured business against its insurance broker and its insurer after a
fire destroyed retail and storage facilities containing personal property and equipment. The
insurance policy at issue allegedly failed to provide adequate building, personal property, and
equipment coverage and lacked coverage for “extra expense” or business income interruption.
Plaintiff Northeast Builders Supply & Home Centers, LLC, alleges (1) negligence,
(2) misrepresentation, (3) breach of fiduciary duty, and (4) violation of the Connecticut Unfair Trade
Practices Act against defendants Member Insurance Agency, Inc., and Pennsylvania Mutual
Insurance Company (“PLM”).
Plaintiff has moved for reconsideration of the Court’s decision on summary judgment on all
counts as to defendant PLM and on the CUTPA claims against both defendants. For the following
reasons, plaintiff’s motion for reconsideration will be granted.
Agency Theory Claims
The Court granted summary judgment in favor of PLM, the insurer, on all counts against it
but allowed claims against Member, the broker, to proceed. Plaintiff argues that the Court

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overlooked material facts genuinely in dispute as to whether Member was the agent of PLM and,
thus, whether PLM may be vicariously liable for the acts of Member. In each of its four counts
against PLM, plaintiff alleged that Member was acting as PLM’s agent. As such, plaintiff contends
PLM, as principal, is vicariously liable for the acts of Member, which the Court found sufficient to
merit a trial.
Although agency is normally a question of fact, its existence or nonexistence may be
determined as a matter of law. Agency is the fiduciary relation which results from the
manifestation of consent by one person to another that the other shall act on his behalf
and subject to his control, and consent by the other so to act.
Macomber v. Traveleres Property & Casualty Corp., 261 Conn. 620, 639 n. 12 (2002) (internal
citation omitted). A broker is considered the agent of the insured for purposes of negotiating a policy
with an insurance company. Ursini v. Goldman, 118 Conn. 554, 173 A. 789, 791 (1934); Mishiloff v.
American Central Ins. Co., 102 Conn. 370, 379 (1925). Considering the traditional agency
relationship between plaintiff (the insured) and Member (its broker), the Court was not persuaded
that Member could be simultaneously acting as the agent of PLM (the insurer). Indeed, “it is
important to note that an independent insurance agent does not become an agent of an insurer
simply by collecting and remitting premiums for the insurer’s ultimate benefit … To hold otherwise
would effectively make agents out of all independent insurance brokers.” Kenneth v. One Beacon
Ins., 2005 WL 3047226, at *4 (Conn. Super. Ct. Oct. 24, 2005); see also Hallas v. Boehmke &
Dobosz, 239 Conn. 658, 675 n. 16 (1997). Under this general framework, for purposes of securing
the insurance at issue in this case, Member would be the agent of plaintiff, not of PLM. Based on
this framework, the Court, at summary judgment, placed an inappropriate burden on plaintiff of
demonstrating that the relationship between Member and PLM was exceptional.
The Supreme Court of Connecticut has instructed that “[t]he existence of agency is a
question of fact to be determined by the trier of fact.” Gateway Co. v. DiNoia, 232 Conn. 223, 240
(1995). Moreover, “[the insurer] carries the burden of demonstrating that there is no genuine issue
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as to any material fact in regards to [the broker] not being an agent of [the insurer] for purposes of
vicarious liability.” One Beacon, at *4. As in One Beacon, PLM’s evidence “is not enough to show
that there are no genuine issues of material fact that an actual or implied agency relationship is
nonexistent, and that there was no apparent authority for [Member] to act on [PLM’s] behalf.” Id.
For example, when asked through interrogatory whether it was authorized to bind insurance
coverage without the prior approval of PLM, Member declined to answer the question, instead
offering boilerplate objections such as “any answer thereto is not calculated to the discovery of
admissible or relevant evidence.” Moreover, plaintiff’s experts opine that the relationship between
PLM and Member was an agency relationship, unusual within the insurance industry. Mr. Stein
testified that in 25 years as a broker, he had “never seen a relationship between the carrier and [] the
broker override a relationship between the insured and the broker, and [] felt in this case that’s what
was happening.”
Plaintiff may be unlikely to persuade a jury under its theory of vicarious liability, as it was
previously unable to persuade this Court. Nevertheless, upon reconsideration in light of
Connecticut precedent, the Court cannot find that no reasonable jury could find an agency
relationship between Member and PLM. Accordingly, the Court will revive the claims against PLM
based on plaintiff’s agency theory of liability. Plaintiff will be left to its proof at trial.
CUTPA Claims
Plaintiff argues that the Court should reconsider its decision granting summary judgment in
favor of defendants on the CUTPA counts, namely because plaintiff submits it has alleged more
than mere professional negligence. Neither defendant responded to plaintiff’s motion on the issue
its CUTPA claims . On reconsideration, the Court agrees that defendants’ actions, as alleged, could
be characterized as moving beyond mere professional negligence and into the entrepreneurial realm.
See Janusauskas v. Fichman, 264 Conn. 796, 809 (2003) (finding that CUTPA is applicable only to
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entrepreneurial aspects of a professional practice, such as the solicitation of business and billing
practices, rather than to the competence and strategy employed by a defendant). In the instant case,
although defendants’ alleged actions can be properly characterized as negligent, they also involve the
alleged solicitation of business involving misrepresentation. Indeed, C.G.S.A. § 38a-816 defines
deceptive acts and practices in the business of insurance to include “[m]aking, issuing or circulating,
or causing to be made, issued or circulated, any estimate, illustration, circular or statement, sales
presentation, omission or comparison which: (A) Misrepresents the benefits, advantages, conditions
or terms of any insurance policy.” Such conduct, explicitly prohibited by CUIPA, could support
allegations of CUTPA violations. Accordingly, the Court will revive the CUTPA claims.
CONCLUSION
For the foregoing reasons, plaintiff’s motion for reconsideration is GRANTED. The Court
vacates its prior ruling granting summary judgment [ECF No. 121]. Accordingly, the Court finds
that plaintiff is entitled to have a jury consider its claims, so the case will be set down for trial. The
parties shall submit proposed trial dates, including estimated trial length by July 26, 2019.
Dated this 12th day of July, 2019, at Bridgeport, Connecticut.

/s/Warren W. Eginton
WARREN W. EGINTON
SENIOR UNITED STATES DISTRICT JUDGE

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