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

Filing 80

ORDER denying 57 Motion to Dismiss. Signed by Judge Warren W. Eginton on 8/22/17. (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
INSURANCE COMPANY,
Defendants.

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3:15-cv-00549-WWE

MEMORANDUM OF DECISION ON DEFENDANT’S MOTION TO DISMISS
This is an action by plaintiff Northeast Builders Supply & Home Centers LLC
(“Northeast”) alleging that defendants provided insurance policies that were inadequate to cover
losses from a fire that destroyed Northeast’s buildings. Defendant Pennsylvania Lumbermens
Mutual Insurance Company (“Lumbermens”) has moved to dismiss Count V (negligence), Count
VI (misrepresentation), Count VII (fiduciary duty), and Count X (unfair trade practice), arguing
that Lumbermens had no duty to correct deficiencies in plaintiff’s insurance coverage and that
there is no basis for any claim of direct liability against it.
Lumbermens argues that it had no duty to check the adequacy of the coverages it was
requested to provide and no right to correct those coverages to provide something other than
what was requested. Lumbermens acknowledges that a client’s insurance agent may owe the
client a duty with respect to the nature of the insurance procured, but contends that no cases have
held that an insurer has a duty to independently evaluate the types and levels of insurance
requested. Lumbermens argues that it had no duty to protect Northeast from the possibility that
it might suffer an insurance loss greater than the insurance it wanted to procure. Finally,
Lumbermens contends that Count VI fails to allege any misrepresentations; that Count VII fails
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to allege the existence of a fiduciary relationship; and that Count X fails to allege how
Lumbermens breached the Connecticut Unfair Trade Practices Act.
Northeast responds that Lumbermens knew or should have known that the coverages
provided to Northeast under the policy were inconsistent with Northeast’s prior coverages and
were otherwise inadequate, but Lumbermens failed to correct the deficiencies in the coverages
provided. Northeast contends that Lumbermens was in the position of a fiduciary. Lumbermens
submits that that it “had no duty to protect Northeast from the possibility that it might suffer an
insurance loss greater than the insurance it wanted to procure.”
“It is well settled that a fiduciary or confidential relationship is characterized by a unique
degree of trust and confidence between the parties, one of whom has superior knowledge, skill or
expertise and is under a duty to represent the interests of the other.” Macomber v. Travelers
Property and Cas. Corp., 261 Conn. 620, 640 (2002). Under circumstances similar to the instant
case, the Superior Court of Connecticut declined to rule out the existence of such a special
relationship:
It will remain for the plaintiff to prove the nature of this “special relationship” in
order to meet the requirements of the finding of a fiduciary relationship. Thus, this
Court refuses to adopt a standard wherein all actions between an insured and insurer
based upon breach of fiduciary duty in the performance and administration of an
insurance contract are not allowed in Connecticut.
Twin Summer Condominium Ass’n, Inc. v. Travelers Indem. Co., 2009 WL 1143079, at *3
(Conn. Super. Ct. Apr. 3, 2009). Accordingly, it will remain for Northeast to prove the nature of
its relationship with Lumbermens. The issue of direct liability may be revisited after the close of
discovery. Lumbermen’s motion to dismiss will be denied.

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CONCLUSION
For the foregoing reasons, Lumbermens’ motion to dismiss [ECF No. 57] is DENIED.
Dated this 22nd day of August, 2017, at Bridgeport, Connecticut.

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

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