JANET BOND ARTERTON, District Judge.
Plaintiff, Hartford Roman Catholic Diocesan Corporation (the "Archdiocese") brought suit in November 2012 against Defendant Interstate Fire and Casualty Company ("Interstate") for breach of contract (Count One), breach of the covenant of good faith and fair dealing (Count Two), and unfair trade practices in violation of the Connecticut Unfair Insurance Practices Act ("CUIPA"), Conn. Gen. Stat. § 38a-815 et seq., and the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. § 42-110b (Count Three), arising from Interstate's failure to indemnify the Archdiocese for monies it paid in settlement to four victims of three of its priests' sexual abuse. On July 28, 2016, after a three-week bench trial, judgment entered in the Archdiocese's favor on Count One and in Interstate's favor on Counts Two and Three. (See Memorandum of Decision ("Decision") [Doc. # 250] at 2.)
The Archdiocese now asks [Doc. # 256] that this Court, pursuant to Fed. R. Civ. P. 52(b), 59(a)(2), and 59(e), amend and/or make additional conclusions of law and findings of fact, and enter a new judgment in favor of the Archdiocese on Count Three, finding that Interstate violated CUIPA and is liable to the Archdiocese pursuant to CUTPA. (Pl.'s Mem. Supp. Mot. to Amend Judgment ("Pl.'s Mot. to Amend") [Doc. # 256-1] at 1.) For the following reasons, Plaintiff's Motion is denied.
Rule 59(e) allows a court to "alter or amend a judgment" on a party's motion. Fed. R. Civ. P. 59(e). Rule 52(b) permits a court, on a party's motion, to "amend its findings — or make additional findings — and . . . amend the judgment accordingly." Fed. R. Civ. P. 52(b).
Under both Rules 52(b) and 59(e) a court may "revisit a prior decision when there has been an intervening change in the law, new evidence becomes available, or there is a need to correct a clear error or prevent manifest injustice." Hollis, 189 F.R.D. at 262; see also United States v. Rice, 594 F. App'x 481, 485 (10th Cir. 2014). The Second Circuit has specifically approved a district court's authority under Rule 59(e) to "alter or amend [a] judgment to correct a clear error of law or prevent manifest injustice." Munafo v. Metro. Transp. Auth., 381 F.3d 99, 105 (2d Cir. 2004) (internal quotation marks and citations omitted). Plaintiff asserts that "[t]he purpose of [its] Motion [is] to correct errors in law and in fact," which it argues require a new judgment in favor of Plaintiff on Count Three.
Neither Rule is intended to provide a party with the opportunity to merely relitigate matters or present the case under new theories. See e.g., Wallace v. Brown, 485 F.Supp. 77, 78 (S.D.N.Y. 1979); Sims v. Mme. Paulette Dry Cleaners, No. 82 CIV. 5438 (MEL), 1986 WL 12511, at *1 (S.D.N.Y. Oct. 31, 1986). Thus, to serve the compelling interest of preserving finality of litigation, "a party who realizes, with the acuity of hindsight, that he failed to present his strongest case at trial, is not entitled to a second opportunity by moving to amend a finding of fact or a conclusion of law." Fontenot v. Mesa Petroleum Co., 791 F.2d 1207, 1220 (5th Cir.1986); see also 9 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2582 (1971).
The Archdiocese argues that the findings and conclusions of law in the Decision must be amended because the Court: (1) adopted the incorrect standard for proving a CUIPA general business practice, (2) overlooked admissions by Interstate that it always violated Conn. Gen. Stat. § 38a-816(6)(E) in addition to "facts that would increase the percentage of unfair claims settlement practices by Interstate," and (3) failed to separately consider the claims made under Section 38a-816(6)(G), which it claims the evidence establishes Defendant violated. (Pl.'s Mot. to Amend at 1-2.) In opposition Interstate maintains that the Court properly rejected the CUTPA and CUIPA claims based on the Archdiocese's failure to prove Interstate engaged in a "general business practice," arguing that the Archdiocese has pointed to no clear error as required for relief under Rules 52 and 59, but rather is attempting to offer new evidence or legal theories which were available at the time of trial, but which the Archdiocese chose not to make part of its case. (Def.'s Opp'n at 1.)
The Archdiocese first attacks the legal standard the Court used in making its determination that Interstate's claim handling practices did not rise to the level of a general business practice within the meaning of CUIPA, arguing that "[t]he Court's standard was too high, based on case law from Connecticut and sister states and based on the NAIC's [("National Association of Insurance Commissioners")] benchmarks for the percentage of unfair practices that warrant a finding of a general business practice." (Pl.'s Mot. to Amend at 4.) Thus, the Archdiocese argues that the Court abused its discretion because it premised its decision on an error of law. (Pl.'s Reply at 4 (citing India.com, Inc. v. Dalal, 412 F.3d 315, 320 (2d Cir. 2005).)
However, the Court used the definition adopted by the Connecticut Supreme Court in Lees v. Middlesex Ins. Co., 229 Conn. 842 (1994). (Memorandum of Decision at 92.) Looking to the dictionary for the words' common understanding, the Lees Court noted that "[g]eneral" is defined as "prevalent, usual [or] widespread" . . . and "practice" means "[p]erformance or application habitually engaged in . . . [or] repeated or customary action." Lees, 229 Conn. at 849 n.8. Plaintiff does not explain how the Court's reliance on a controlling state supreme court decision constitutes clear error.
It is undisputed that violation of Section 38a-816(6) "requires proof that the unfair settlement practices were `with such frequency as to indicate a general business practice.'" Lees, 229 Conn. at 847-48 (quoting Mead v. Burns, 199 Conn. 651 (1986)). Still, the Archdiocese, relying on Lees and quoting Quimby v. Kimberly Clark Corporation, 28 Conn.App. 660, 671-72 (1992), argues that "more than a singular failure" involving only the policyholder — plaintiff suffices to establish a general business practice. (Pl.'s Mot. to Amend at 4.) Defendant counters that although "many cases have held that more than one act of misconduct is necessary . . . the Archdiocese is twisting those holdings to mean that anything more than one instance is sufficient to prove a CUIPA violation." (Def.'s Opp'n at 8.)
This Court agrees with Defendant. While both Quimby (reviewing superior court's grant of defendant's motion to dismiss) and Lees (reviewing superior court's grant of summary judgment) found that "isolated" or "singular" instances of insurer misconduct were not sufficient to satisfy the "general business practice" requirement where the respective plaintiffs failed to either allege facts or present evidence of misconduct by the defendant in processing any other claims, both cases noted the necessity for a plaintiff to show the practice was engaged in with some "frequency." Quimby, 28 Conn. App. at 672; Lees, 229 Conn. at 849. As discussed above, the Lees court further expanded on the dictionary definitions of the words "general" and "practice," which is the standard this Court used in determining whether Plaintiff proved that Interstate engaged in a general business practice. Plaintiff has pointed to no clear error in the Court's interpretation of Connecticut law on what qualifies as a general business practice.
Plaintiff recognizes that decisions from other states are not binding but urges that they nonetheless "provide guidance" because CUIPA is based on a model act. (Pl.'s Mot. to Amend at 8.)
Plaintiff urges this Court to follow the Market Regulation Handbook that the NAIC provides to state insurance departments for their audits of insurers' claims handling practices, which presumes that misconduct is a general business practice if more than seven percent of the claims sampled are found to involve the same type of misconduct. (Pl.'s Mot. to Amend at 10.) Additionally, Plaintiff argues that the Court should consider Conn. Gen. Stat. § 38a-15, which was amended effective October 1, 2016 to specifically authorize use of the procedures and definitions in NAIC's Market Regulation Handbook.
The NAIC Handbook was published in 2006 and therefore was clearly available to Plaintiff at the time of trial, but was not incorporated in Plaintiff's evidence, proposed conclusions of law or argument at trial. While the Handbook might have had a persuasive impact when the Court initially made its decision, it lacks that impact upon reconsideration given that it is not controlling or binding and failure to consider it does not constitute clear error. Further, the amendment to Section 38a-15, although not in effect when the judgment was entered, does not change this analysis, because it too is advisory only. Accordingly, reconsideration of the standard utilized in the Decision to determine whether Plaintiff proved a "general business practice" is not warranted.
The Court made its determination that Interstate violated subsection E in 9-11% of similar claims based upon the Archdiocese's arguments and presentation of the evidence at trial. In its proposed conclusions of law, the Archdiocese referenced the evidence regarding four other dioceses (located in Portland, Manchester, Seattle, and Phoenix) to support its assertion that, in violation of subsection E, "Interstate failed to affirm or deny coverage within a reasonable time after proofs of loss ha[d] been completed" with such frequency as to indicate a general business practice.
Trial evidence about each of these eleven claims was examined, as was one additional claim in the Diocese of Sacramento, in determining whether there was proof of an unreasonable delay between Interstate's receipt of completed proofs of loss and its coverage determinations. Ultimately out of the twelve claims, the Court identified three which it determined could be considered "unreasonable delay"—one claim in Portland (eight and a half months), the CM claim in Seattle (five and a half months), and one in Phoenix (six months),
Based on the 57 claims files the Archdiocese obtained from Interstate, the Court concluded Interstate committed unfair practices in approximately 9 to 11% of cases (apart from the underlying claims here). The Archdiocese takes issue with both the number of cases in which the Court found unreasonable delay as well as the total sample size used as the denominator to arrive at the 9-11% calculation. Interstate maintains that in addition to never having previously raised these arguments, the Archdiocese misrepresents the evidence and is bound by the Court's initial findings. (Def.'s Opp'n at 17.)
Plaintiff first contends that "because Interstate never provided its policyholders with an affirmance or denial of coverage it always violated subsection E." (Pl.'s Mot. to Amend at 16.) Interstate again highlights that the Archdiocese's proposed conclusions of law identified only four dioceses where a violation of § 38a-816(6)(E) allegedly occurred, never arguing until now that Interstate always committed this unfair practice, and further urges that even putting this shortcoming aside, the evidence does not support Plaintiff's conclusion.
This Court specifically found that in six instances of the twelve argued by the Archdiocese (out of the 57 claim sample), there was not enough evidence to conclude Interstate failed to affirm or deny coverage in violation of subsection E. (See Memorandum of Decision at 92.) Plaintiff's Motion makes no effort to demonstrate clear error in this finding by identifying evidence that would undermine the Court's analysis of Interstate's handling of these six claims. Instead, contrary to the admonition that a party may not use reconsideration as an opportunity "to introduce evidence that was available at trial but was not proffered, to relitigate old issues, to advance new theories, or to secure a rehearing on the merits," United States v. Local 1804-1, Int'l Longshoremen's Ass'n, 831 F.Supp. 167, 169 (S.D.N.Y. 1993), aff'd sub nom. United States v. Carson, 52 F.3d 1173 (2d Cir. 1995) (quoting Fontenot, 791 F.2d at 1219), the Archdiocese makes new, broader, arguments encompassing the totality of the 57 sample claims.
Plaintiff claims for the first time that based on the evidence at trial, Interstate never affirms or denies coverage because a diocese expected or intended the abuse even after receiving priest files, and that even if Interstate makes a payment on a claim, it still does not affirm coverage. (Pl.'s Mot. to Amend at 16.) Although the Court need not consider the Archdioceses' arguments to the extent that they are simply efforts at relitigating issues under new theories, should Plaintiff identify clearly erroneous facts or manifest injustice in the Court's analysis of the claims, the Court would be required to make corrections. For this reason alone the Court undertakes the following analysis.
Interstate's claims handler, Deborah Sons, admitted that she had never denied coverage on a priest sex abuse claim on the ground that a diocese expected or intended the abuse. (See Sons Test., Trial Tr. at 683:24-684:7.) However, she also clarified that she had issued denials for other reasons such as where the incident occurred outside of the policy period.
Plaintiff contends that negotiating settlements or filing declaratory judgment actions does not "take Interstate's conduct out of this type of CUIPA violation." (Pl.'s Mot. to Amend at 17 n.12.) Relatedly, the Archdiocese asserts that this Court cannot assume that claims are affirmed simply because they are paid by Interstate, pointing to "Interstate's admission that it never affirmed or denied a claim" and its "further admission that [it] paid only one claim in full (Portland, Maine)."
Plaintiff's argument hinges on the premise that a violation of subsection E occurs if an insurer refuses to explicitly adopt a coverage position on a particular claim, even where that insurer has acted on the claim within a reasonable time period, whether by initiating a declaratory judgment or paying some portion of the coverage in accordance with a settlement. Interstate urges that this cannot be so, for "the intended purpose of declaratory judgment actions and settlement negotiations [is] to resolve claims when coverage is unsure." (Def.'s Opp'n at 18 (quoting Connecticut Ass'n of Health Care Facilities, Inc. v. Worrell, 199 Conn. 609, 613 (1986) ("the purpose of a declaratory judgment action is to secure an adjudication of rights where there is a substantial question in dispute or a substantial uncertainty of legal relations between the parties").)
Thus, the question is whether the Connecticut legislature, in drafting subsection E, intended that insurance companies be required to formally take a specific position on a coverage dispute no matter what or when other steps are taken to resolve a disputed claim. Alternatively, Defendant argues subsection E's purpose is simply to prohibit the insurer from unreasonably stalling action on a specific insured's claim, and thus as long as the payment was made (or declaratory judgment action filed) "within a reasonable amount of time after the proof of loss statements were completed," the statute's purpose is served. Conn. Gen. Stat. § 38a-816(6)(E). Neither the legislative history of the statute nor any case law shed light on the section's purpose.
Given that the Archdiocese did not advance this argument at trial and in the absence of Connecticut legislative history reflecting whether literal compliance was intended in all circumstances, or any state courts' analysis, this Court will leave it to the Connecticut Supreme Court to provide clarity on this issue in the appropriate case. Thus, it was not erroneous, let alone clearly so, to find there was no unfair trade practice for those instances in which Interstate initiated a declaratory action or negotiated a settlement within a reasonable period of time but never formally affirmed or denied coverage.
Both of Plaintiff's next arguments, suggesting that Defendant never affirmed coverage based upon "the pending column in trial Exhibit 262" and Ms. Sons' testimony regarding the Kansas City progress notes, miss the mark. Simply because there are claims pending (see Trial Exhibit 262), meaning they have not been affirmed or denied, does not mean that Interstate has failed to affirm or deny coverage within the meaning of subsection E. In fact, in its Reply Memorandum, Plaintiff inconsistently stated
(Pl.'s Reply at 8.) In other words, Plaintiff simultaneously but contradictorily urges that the pending claims should be considered as evidence that Defendant never affirmed or denied these claims and that they be removed from the total sample of 57 claims used at trial.
Alternatively, Plaintiff argues that the Court should have included in its calculation "only those claims in which proofs of loss were submitted," thereby excluding the 25 unpaid claims and the paid claims with insufficient evidence that the proof of loss was completed. (Pl.'s Mot. to Amend at 19.) According to Plaintiff, "[i]f a policyholder notifies its carrier of a claim but never seeks coverage by providing a proof of loss, then there is no event that starts the clock running — an event from which to measure a reasonable period of time in which to affirm or deny a claim — and Subsection E is simply inapplicable to that claim." (Id.) Defendant does not dispute this general premise, but rather reasons that Plaintiff's argument is meritless because "[t]he Archdiocese cannot rely on the absence of evidence that it was obligated to introduce." (Def.'s Opp'n at 21.)
With respect to the 25 unpaid claims, Plaintiff argues that there is a distinction between claims submitted to put Interstate on notice, which it asserts are the 1700 claims in Trial Ex. 262, and claims submitted for reimbursement, which it argues is a "much smaller universe." (Pl.'s Mot. to Amend at 19.)
Similarly, this Court cannot remove from the calculation claims which the Archdiocese alleged at trial violated subsection E, without offering sufficient evidence for the Court to conclude that "proof of loss statements [had] been completed" for those claims as required by that subsection. Conn. Gen. Stat. § 38a-816(6)(E). At trial, the Archdiocese specifically alleged that Interstate's actions in Manchester and Sacramento constituted a violation of subsection E, but failed to prove proofs of loss were completed with regard to those claims. The Archdiocese cannot now benefit from its failure to prove those claims by asking the Court to exclude them from consideration.
Finally, the Archdiocese asserts that the sample size must be reduced by ten "duplicate" claim files for individual victims who alleged abuse over multiple policy years. Ms. Sons acknowledged at trial that "if there is a single claimant whose claim [] stretches across seven years, that's seven claims in this system." (Trial Tr. at 635:1-8 (discussing Trial Ex. 262).) Even if the Archdiocese is correct that these duplicate claims should not have been included in the calculation, it also admits that the Court must add five additional claims that were not included in the 57 sample but were analyzed by the Court, reducing the sample size by only five to a total of 52. (Pl.'s Mot. to Amend at 23.) Using this denominator instead of 57 alters the calculation that Plaintiff proved unfair practices in approximately 9.5 to 11.5% of cases, not 9 to 11%.
Finally, Plaintiff maintains that the Court erred by not separately considering whether Interstate violated Section 38a-816(6)(G), and that had it done so, it would have found that the Archdiocese established Interstate engaged in the general business practice of "compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds." Conn. Gen. Stat. § 38a-816(6)(G).
The language of the statute is clear that one element of this particular unfair claim settlement practice requires proof that the insurance company offered "substantially less than the amounts ultimately recovered" by the insured through litigation. As Interstate notes, the Archdiocese failed to introduce such evidence at trial, and in its memorandum appears to concede as much: with regard to Phoenix and Sacramento, "[t]here is no evidence in the Progress Notes that Interstate made any settlement offer to these dioceses before they were forced to institute litigation with Interstate." (Pl.'s Mot. to Amend at 30.) It further concedes that "[f]or each of those 77 claims [in which Interstate paid the dioceses as a result of coverage litigation or bankruptcy of the diocese], Interstate's own report (Trial Exhibit 262) demonstrates that the diocese was paid something, which is more than the nonpayment from Interstate prior to litigation (id. at 28 (emphasis added)).
It is therefore apparent that the Archdiocese's argument is premised on the mistaken belief that an insurance company's failure to offer settlement at all is equivalent to its having made a low-ball offer. Plaintiff cites no supporting case law and the very language of subsection G, that the insurer must have "offer[ed] substantially less" than what the insured ultimately recovers requires on its face that there was some offer extended. To offer zero dollars is simply a "no pay" position, and this cannot be considered an "offer" within the meaning of subsection G.
Moreover, the type of conduct the Archdiocese complains of seems to be captured by other portions of CUIPA. For instance, when an insurer refuses to make any offer, it runs the risk of being found in violation of subsection F, which requires an insurer to attempt in good faith to effectuate equitable settlement of claims "in which liability has become reasonably clear." Conn. Gen. Stat. § 38a-816(6)(F). Additionally, subsection E, discussed above, by requiring the insurance company to either affirm or deny coverage within a reasonable time after proof of loss statements are completed, prohibits an insurance company from offering nothing and simply sitting back and waiting for the insured to initiate litigation. Accordingly, the Court finds no clear error in its ruling that Plaintiff failed to demonstrate violation of Section G.
For the foregoing reasons, Plaintiff's Motion for Amended or Additional Findings and Conclusions of Law and to Amend the Judgment is DENIED.
IT IS SO ORDERED.
Conn. Gen. Stat. § 38a-15.
