CITIZENS COMMUNICATIONS CO. v. TRUSTMARK INSURANCE

3:01cv948(MRK)

303 F.Supp.2d 197 (2004) | Cited 3 times | D. Connecticut | February 18, 2004

MEMORANDUM OF DECISION

Citizens Communications ("Plaintiff or "Citizens") brings this actionagainst Defendants Trustmark Insurance ("Trustmark"), RMTS Associates("RMTS"), and American Stop Loss Insurance Brokerage Services ("ASL"),seeking declaratory relief and damages stemming from a dispute overDefendants' alleged breach of contractual insurance coverage obligations.All of the parties have filed motions for summary judgment [docs. #63,65, 70, 73]. For the reasons stated below, Plaintiff's Motion for SummaryJudgment [doc. #73] is DENIED; Trustmark's Motion for Summary Judgment[doc. #63] is GRANTED in part and DENIED in part; RMTS's Motion forSummary Judgment [doc. #65] is GRANTED in part and DENIED in part; andASL's Motion for Summary Judgment [doc. #70] is GRANTED in part andDENIED in part.

I.

The dispute arises from a contract between Citizens and Trustmark forTrustmark to supply medical stop-loss insurance to Citizens. Stop-lossinsurance is purchased primarily byPage 2large corporations that self-insure their employees. The insurancereimburses the corporation for claims paid under its self-funded plan,usually pursuant to a high deductible. The primary purpose of stop-lossinsurance is to avoid the risk of a single catastrophic claim. Citizens,as the seventh largest telephone company in the United States, withassets of nearly $7 billion (for the year ending Dec. 31, 2000), and withabout 5000 employees, provides health insurance to its employees undersuch a self-funded health plan (the "Plan"). Citizens' Mem. of Law inSupp. Of Summ. J. [doc. #75], at 3; Trustmark's Local Rule 9(c)(1)Statement [doc. #67] ¶ 1. This case involves disputes betweenCitizens and its stop-loss insurance provider, Trustmark, forreimbursement of medical expenses incurred by three individuals (PatrickLeggett, Thomas Grimme, and Garry Lonquist) who were beneficiaries of theCitizens Plan.

In July 1998, Citizens, through the third-party administrator of thePlan — North American Benefits Network ("NABN") — hiredDefendant ASL to serve as Citizens' broker for acquiring medicalstop-loss insurance. Amend. Compl. [doc. #53] ¶ 16. ASL was to obtainrate quotations for stop-loss insurance with a $100,000 deductible thatwould reimburse Citizens for hospital and medical claims paid pursuant tothe Plan. Id. In October 1998, ASL requested a rate quotationfrom RMTS, a company that markets the insurance products of othercompanies. Id. ¶ 19, 20.

The 1999 Policy. RMTS provided ASL with a rate quotation fromTrustmark for the specific stop-loss insurance policy ASL had requested.Id. ¶ 22. Trustmark is an insurance company that issuesstop-loss insurance coverage as well as other insurance products.Trustmark's Local Rule 9(c)(1) Statement [doc. #67] ¶ 4. In its ratequotation, dated October 15, 1998, RMTS presented Trustmark's offer toASL, stating that the proposed coverage was contingent on RMTS (andTrustmark) receiving certain information from Citizens about thePage 3persons to be covered by the policy. Id. ¶¶ 15-19.Specifically, Trustmark requested identification of Citizens "[e]mployeesand/or dependents currently disabled, under long-term treatment or onCOBRA." Id. ¶ 18. Additionally, Trustmark requestedinformation about "[c]laims (including names) which have exceeded$50,000 in the past twelve months and those expected to exceed$50,000 in the next twelve months with diagnosis andprognosis." J.A. [doc. #68] Ex.6 (emphasis in original). RMTS stated inbold-face type on the October 15, 1998 quotation that this informationwas "required in order for [it] to evaluate the risk and complete theapplication," and stated that any proposed coverage was "contingent uponRMTS receiving the [ ] information" requested. Id. Apparently,ASL never asked Citizens to provide any of this information. Trustmark'sLocal Rule 9(c)(1) Statement [doc. #67] ¶ 23; Citizens' LocalRule 9(c)(2) Statement [doc. #89] 123.

However, ASL did request (through NABN) certain information fromCitizens in a November 25, 1998 letter, in which ASL stated that itrequired, among other documents, a "[c]ompleted and signed disclosurestatement." J.A. [doc. #68] Ex. 8. NABN requested the information fromCitizens in a letter dated December 15, 1998, asking that Citizenscomplete the Supplementary Contract Data Sheet for General Informationand advising Citizens that the Data Sheet would act as a DisclosureNotice. Id. Ex. 9. The Disclosure Notice included eightquestions designed to identify claims already in process as well as otherpotentially large claims involving individuals covered under the CitizensPlan. Question #7 of the Disclosure Notice asked whether "any employee ordependent now enrolling for coverage had any medical condition(s) forwhich expenses have exceeded $10,000 in the past twelve months or whichmight be expected to exceed $10,000 in the next twelve months?"Id. Ex. 9 at 1832.Page 4

Marianne Seyler was at the time the Citizens benefits specialistresponsible for providing information to insurance vendors. It isundisputed that in response to Question #7, Ms. Seyler did not discloseany employees or dependents for which medical expenses might be expectedto exceed $10,000 in 1999, although Ms. Seyler testified at herdeposition that she understood that to be what Trustmark was asking forin Question # 7. Id. Ex. 11; Citizens' Local Rule 9(c)(2)Statement [doc. #89], ¶ 26, 27. Ms. Seyler did provide informationabout Citizens employees and dependents who had incurred claims in excessof $75,000 in 1998. J.A., Ex. 11. JoAnn Farrall, Citizens' Director ofCorporate Benefits and a Vice President of the company, signed theDisclosure Notice and mailed it to ASL on December 29, 1998, whichforwarded it along to RMTS. Id. Neither Ms. Farrall nor Ms.Seyler advised Trustmark or RMTS that they were unable to obtaininformation fully responsive to Question #7. Dep. Of Marianne Seyler,J.A. [doc. #69] Ex. 61, at 275-76.

Trustmark issued a medical stop loss insurance policy to Citizens,effective January 1, 1999, providing for an individual deductible of$100,000 with a 15/12 basis, which means that when the expenses for acovered individual exceeded $100,000 in claims paid by Citizens during1999 for services rendered either in 1999 or the last three months of1998, the claim would be eligible for reimbursement under the Trustmarkpolicy. J.A. [doc. #68] Ex. 7. The quoted monthly rate for the Trustmarkpolicy was determined based upon information provided by Citizens and itsagents during the underwriting process. Id.

Patrick Leggett, an insulin-dependent diabetic spouse of a Citizensemployee, was placed on a waiting list for a pancreatic transplant atsome time in 1996 or 1997, and the procedure was pre-certified byCitizens at that time to be covered by the Citizens Plan. Citizens' LocalRulePage 59(c)(2) Statement, ¶ 43. Mr. Leggett was not disclosed byCitizens on the Disclosure Form in response to the question aboutexpected claims over $10,000 in 1999, Id. ¶ 48, althoughCitizens acknowledges that at least Ms. Farrall of Citizens knew aboutMr. Leggett's medical situation at the time Citizens submitted theDisclosure Form. Id. ¶ 47. Mr. Leggett underwent apancreatic transplant on April 4, 1999, Id. ¶ 44, andincurred $139,536.34 in medical expenses for treatments relating to thetransplant between April 1 and April 14, 1999. Id. ¶ 45.

On behalf of Citizens, NABN submitted to Trustmark on October 8, 1999 arequest for reimbursement for $115,121.48 for Mr. Leggett's medicalbills. Id. ¶ 49. RMTS requested additional information fromNABN regarding the Leggett claim on November 12, December 1, December 14,1999, and January 13, 2000. Id. ¶ 50. In February 2000,NABN, again on behalf of Citizens, submitted to Trustmark another requestfor reimbursement for Mr. Leggett's medical bills, in the amount of$46,369.58. Id. ¶ 51. On April 7, 2000, RMTS, on behalf ofTrustmark, informed ASL that it had concerns about whether Mr. Leggett'smedical situation should have been disclosed during the underwritingprocess and that it planned to audit the claim for Mr. Leggett's expensesto determine whether disclosure was required. Id. ¶ 52, 53.In a letter dated December 15, 2000, and sent by RMTS to NABN on December20, 2000, Trustmark denied reimbursement for the Leggett claim on theground that Mr. Leggett should have been disclosed during theunderwriting process. Id. ¶ 54.

Thomas Grimme was a Citizens employee in 1999 and was a beneficiary ofthe Citizens Plan. Citizens' Local Rule 9(c)(1) Statement [doc. #74],¶ 12. Mr. Grimme had been on long-term disability since June 1, 1998,suffering from a "chordoma," a malignant brain tumor that typicallyrecurs. Trustmark's Mem. In Opp. To Pl.'s Mot. For Partial Summ. J. [doc.#85] at 6. Citizens didPage 6not disclose Mr. Grimme as an employee whose medical expenses werelikely to exceed $10,000 in 1999. On February 28, 2000, ASL requestedreimbursement for Mr. Grimme's 1999 medical expenses paid by the Plan.After an audit, Trustmark denied the claim on December 15, 2000, bothbecause the claim had not been disclosed in the underwriting process andbecause Trustmark maintains that Mr. Grimme was not covered by the stoploss insurance contract. J.A. [doc. #68], Ex. 50, at 748-49.1

On October 21, 1999, the doctor for Garry Lonquist, a Citizensemployee, requested pre-certification of aortic valve replacement surgeryand mitral valve replacement surgery. Mr. Lonquist underwent cardiaccatherization on October 29, 1999, which confirmed the need for the valvereplacement surgery. Gateway, Citizens' case management provider,pre-certified Mr. Lonquist's surgery, along with five days ofhospitalization, and he was admitted to the hospital on November 29,1999. Trustmark's Mem. of Law [doc. #64] at 15-16. The surgery took placeon November 30, 1999. On December 8, 1999, Gateway learned that Mr.Lonquist had been experiencing complications and remained unstable fordischarge. Id. at 16. Gateway further learned on December 9 thatMr. Lonquist had undergone sternal wound debridement and onPage 7December 13 learned that Mr. Lonquist was in intensive care on aventilator and recovering from a staph infection. Id. By thispoint, NABN had scanned into its computer system bills totalingapproximately $222,000 for Mr. Lonquist's medical care. Citizens' LocalRule 9(c)(2) Statement [doc. #89], ¶ 63. At this point, Gatewayrequested authorization of "case management" from Citizens, which is a"red flag" that the claim will be an increased amount of money.Id. ¶ 64, 65. Case management was authorized on December 15,1999. Id. ¶ 66.

The 2000 Renewal. Meanwhile, in September 1999, ASL hadnotified RMTS that Citizens intended to renew the Trustmark stop-lossinsurance policy for 2000. Trustmark's Mem. of Law [doc. #64] at 15. In aletter dated September 22, 1999, RMTS informed ASL that the 2000 renewalwould be capped at an increase of no more than 5% over the 1999 Trustmarkpolicy, and that RMTS required confirmation that "as of November 30,[1999,] RMTS has received notification on all known claimantswith the potential to exceed the $100,000 Specific deductible for the1999 contract period and any existing claims with the potential to exceedthe Specific deductible for the 2000 contract period based on diagnosisand paid/pending claims." J.A. [doc. #68], Ex.14 (emphasis in original).On December 7, 1999, RMTS sent ASL a follow-up letter, reiterating thatthe "renewal is based on the assumption that there are no other claims,except the claims and potential claims [already identified], which willexceed the $100,000 Specific deductible for the 1/1/99 to 12/31/99contract period and that there are no currently developing claims withthe potential to exceed the $100,000 Specific deductible for the 1/1/99to 12/31/99 contract year based upon diagnosis and/or pending claims.Should updated claim data prove this assumption to be wrong, we reservethe right to amend the Specific rate and/or set higher individualdeductibles retroactive to the effective date of the renewal contractperiod." Id.Page 8Ex. 19.2

The Trustmark renewal proposal was accepted by John Rowland for ASL onbehalf of Citizens, without identification of any currently developingclaims with potential to exceed $100,000, although the parties disagreeabout the date on which ASL accepted the Trustmark proposal. Citizensclaims the proposal was accepted on December 10, 1999 (the date on whichMr. Rowland signed his acceptance); Trustmark counters that the renewalproposal was not accepted until January 11, 2000 (the date on which ASL'sacceptance was faxed to RMTS). Id. The Court need not resolvethat dispute to dispose of the pending motions.

On January 12, 2000, the day after ASL faxed RMTS the acceptance of the2000 renewal policy, Citizens faxed Trustmark an initial notice of Mr.Lonquist's stop-loss claim in the amount of $1,053,657.44. J.A. [doc.#68], Ex.24. Mr. Lonquist's medical bills ultimately reached $3.1million. Id. Ex.31. Trustmark sent ASL a letter, dated February15, 2000, indicating that "[t]he acceptance of the renewal offer 49 daysafter the precertification request without disclosing this potentialclaimant to RMTS is unacceptable. The failure to make this potential lossknown to RMTS is contrary to the terms of the renewal offer."Id. Ex. 29. Trustmark then offered Citizens two options: eitherCitizens could "accept the rescission of stop loss coverage beginningJanuary 1, 2000," with all premiums returned, or Trustmark would acceptthe renewal with the existing terms and conditions except that the rateincrease would be 30% over the previous year, and the policy wouldinclude a separate $1 million deductible for Garry Lonquist, effectivelyremovingPage 9him from the Plan's coverage because the Plan contained a $1million maximum benefit. Id. This proviso regarding Mr. Lonquistis referred to by the parties as the "Lonquist Laser." Trustmarkindicated that if it did not receive a response to its offer within tendays it would "return the premium and treat the renewal as void."Id.

On February 16, 2000, NABN sent a letter to ASL acknowledging that ASLhad advised it that day that Trustmark was denying the Lonquist claim andwas considering rescinding the policy. Id. Ex. 30. RMTSresponded on February 18, 2000 with additional detail about Trustmark'soffer. In addition to the Lonquist Laser, Trustmark's offer includedhigher deductibles for several other high-risk persons. Id. Ex.32. ASL indicated in response to RMTS's letter that Citizens might acceptTrustmark's initial offer of February 15 with the Lonquist Laser, butCitizens would not accept the renewal with lasers for other individuals.Dep. of David Kalm, J.A. [doc. #69], Ex. 56 at 250-51. On February 22,2000, NABN notified Citizens that Trustmark would not agree to itsproposal, but that Trustmark would convey a new proposal to Citizens soonthereafter. J.A. [doc. #68], Ex. 34. On the afternoon of February 25,NABN faxed to Citizens the terms Trustmark offered for the 2000 renewal,which were effectively the terms of the original 2000 renewal plus theLonquist Laser; Citizens was advised that the offer expired at close ofbusiness that day. Id. Ex. 35. Following discussions thatafternoon, Ms. Seyler of Citizens faxed a letter to Trustmark acceptingthe revised proposal and noting that it had had less than two hours tomake the decision. The letter stated that "[i]n accepting this proposal,the undersigned company does not waive any or all claims it may have withrespect to the excluded individual." Id. Ex. 36.

RMTS responded to Citizens on February 28, stating that Citizens'reservation of rightsPage 10had converted its "acceptance" into a counteroffer. RMTS informedCitizens that Trustmark rejected the Citizens counteroffer but would giveCitizens until March 1 to respond to the Trustmark offer, a deadline thatwas later extended to March 3. Id. Ex. 40, 41. Apparently in anattempt to explore other options for obtaining stop-loss insurance, onMarch 2 ASL forwarded to NABN, on behalf of Citizens, rate quotes forstop-loss insurance from two other insurance providers — Reliastarand American National. Each quote excluded Mr. Lonquist from coverage andhad an annual premium that was approximately $100,000 more expensive thanTrustmark's renewal offer. Id. Ex. 43.

On March 3, Citizens accepted Trustmark's offer and confirmed itsacceptance in a letter dated March 6 from Ms. Farrall, an officer ofCitizens (the "March 6 Agreement"). In her cover letter Ms. Farrallrecited the terms of Trustmark's offer, which included the fact that"Trustmark will set a separate deductible for Mr. Lonquist of $1,000,000.In effect, Trustmark will remove Mr. Lonquist's claims as eligible forSpecific Stop Loss coverage." Id. Ex. 44, 45. Attached to Ms.Farrall's cover letter was a term sheet that also expressly acknowledgedagreement to the Lonquist Laser. Id.

Citizens then proceeded to pay premiums in accordance with the March 6Agreement and to submit claims for reimbursement pursuant to theinsurance contract. See, e.g., J.A. [doc. #69], Ex. 51; Dep. ofHenry Trevor, Ex. 64, at 83-84. Ultimately, Citizens entered into asettlement with the hospitals that had provided care to Mr. Lonquist,under which Citizens paid $800,000 for invoices that exceeded $3 million.Citizens' Local Rule 9(c)(2) Statement [doc. #89] ¶ 80. In October2000, Citizens for the first time informed Trustmark that Citizens didnot consider itself bound by the terms of the March 6 Agreement and thatin particular, Citizens did not considerPage 11itself bound by the Lonquist Laser. Aff. of Henry Trevor, J.A.[doc. #68], Ex.1. ¶ 8.

The original Complaint was filed in the action on May 25, 2001. Compl.[doc. #1]. The Amended Complaint alleges ten causes of action against thedefendants: 1) declaratory judgment against Trustmark and RMTS that Mr.Lonquist was covered by the 2000 renewal policy and that the LonquistLaser was invalid; 2) breach of contract against Trustmark and RMTS withregard to the 2000 renewal; 3) breach of contract against Trustmark andRMTS with regard to the 1999 policy; 4) estoppel against Trustmark andRMTS with regard to the 1999 policy; 5) breach of the implied covenant ofgood faith and fair dealing against Trustmark and RMTS with regard toboth the 1999 policy and the 2000 renewal; 6) violation of theConnecticut Unfair, Deceptive, and Prohibited Insurance Practices Act(CUIPA), Conn. Gen. Stat. § 38a-815, et seq., against Trustmark andRMTS with regard to both the 1999 policy and the 2000 renewal; 7)violation of the Connecticut Unfair, Deceptive, and Prohibited TradePractices Act (CUTPA), Conn. Gen. Stat. § 42-110a, et seq., againstTrustmark and RMTS with regard to both the 1999 policy and the 2000renewal; 8) a claim in the alternative against ASL for negligence withregard to the 1999 policy; 9) a claim in the alternative against ASL fornegligence with regard to the 2000 renewal; and 10) a claim in thealternative of negligent misrepresentation against ASL. Amend. Compl.[doc. #53].

All of the parties have moved for partial summary judgment. Citizensseeks summary judgment on the first and third causes of action. Citizens'Mem. of Law [doc. #75], at 1-3. Trustmark seeks summary judgment on thefirst through seventh causes of action, but only with regard to theLeggett and Lonquist claims. Trustmark's Mem. of Law [doc. #64] at 22.RMTS seeks summary judgment on the first through fifth causes of actionwith regard to all of thePage 12claims, as well as on the sixth and seventh causes of action withregard to the Leggett and Lonquist claims. RMTS's Mem. of Law [doc. #66]at 18. ASL seeks summary judgment on the eighth, ninth, and tenth causesof action. ASL's Mem. in Support of Mot. for Summ. J. [doc. #71] at 4.

II.

Summary judgment is appropriate when there is no dispute as to agenuine issue of material fact and the moving party is entitled tojudgment as a matter of law. Fed.R.Civ.P. 56(c). See Celotex Corp.v. Catrett, 477 U.S. 317, 322-23 (1986). The moving party carriesthe burden of demonstrating that there is no genuine material dispute offact. Carlton v. Mystic Tramp., Inc., 202 F.3d 129, 133 (2d Cir.2000). The Court will address each of the claims individually.

Before discussing the contested motions, there are a number of thesummary judgment motions that are uncontested, and this Court willdispose of them at this time. RMTS's motion for summary judgment on thefirst, second, third, and fourth causes of action is unopposed byCitizens and is, therefore, granted. Citizens' Mem. of Law in Opp'n [doc.#88] at 1. ASL's motion for summary judgment on the tenth cause of actionis granted, absent opposition by Citizens. PL's Supp. Mem. [doc. #103] at2, n.3. Based on Trustmark's representation at oral argument that it willnot pursue any claim that the denial of the Lonquist claims was based inany way on ASL's untimely renewal, ASL's motion for summary judgment onthe ninth cause of action is granted absent objection. Finally, Citizensand ASL agree that the eighth cause of action is tied to the third causeof action; if Citizens' motion for summary judgment on the third cause ofaction isPage 13granted, the eighth cause of action will be dismissed, if it is notgranted, ASL's motion for summary judgment on the eighth cause of actionwill be denied. Id. at 5.

A. The Leggett Claim

Citizens' third and fifth causes of action relate directly to theLeggett claim. Trustmark has moved for summary judgment as to both ofthese causes of action, while Citizens has moved for summary judgment onthe third cause of action alone. Citizens claims that Trustmark and RMTSbreached the stop-loss insurance contract and the duty of the impliedcovenant of good faith and fair dealing by not paying the Leggett claim.Amend. Compl. ¶ 103-105, 117-125. Trustmark argues that Citizens'failure to disclose Mr. Leggett's condition during the underwritingprocess constituted a material misrepresentation and thus a materialbreach of the contract, thereby discharging Trustmark's duties under thecontract. Trustmark's Mem. of Law [doc. #64] at 26-30. Citizens' primaryresponse to this defense is that there was no knowing or materialmisrepresentation. Citizens' Mem. of Law in Opp'n [doc. #88] at 5-6.

It is clear that the question whether Citizens knew or should haveknown about Mr. Leggett's condition is a question of fact which isproperly the province of the jury. See, e.g., McClintock v.Rivard, 219 Conn. 417, 427 (Conn. 1991) ("Whether evidence supportsa claim of fraudulent or negligent misrepresentation is a question offact."). The essence of the dispute here is whether Citizens' knowledgeof Mr. Leggett's need for a pancreas transplant and placement on awaiting list for a pancreas rose to the level of knowledge that his claim"might be expected to exceed $10,000 in the next twelve months" asrequested in the Disclosure Form. J.A. [doc. #68], Ex. 9, at 1832.Citizens points out that Mr. Leggett had been on the pancreas waitinglist for twoPage 14years without receiving a transplant and that as a consequencethere was no reason for Citizens to expect that he would have such atransplant in 1999. Citizens' Mem. of Law in Opp'n [doc. #88] at 12.Trustmark contends that Citizens' knowledge of Mr. Leggett's conditionand its knowledge that a pancreatic transplant would cost more than$10,000 required Citizens to disclose to Trustmark that Mr. Leggett'sclaims might exceed $10,000 for 1999. Trustmark's Reply [doc. #94] at 3.A dispute of this nature, where the parties disagree about what one partyknew at a certain point, unquestionably constitutes a material dispute offact and is exactly what the summary judgment process is designednot to resolve. This Court will leave this question to the jury.See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)("Credibility determinations, the weighing of the evidence, and thedrawing of legitimate inferences from the facts are jury functions, notthose of a judge.").

Citizens also raises a series of additional defenses suggesting variousreasons why the letter from RMTS to ASL seeking identification ofCitizens "[e]mployees and/or dependents currently disabled, underlong-term treatment or on COBRA," J.A. [doc. #68] Ex. 6, and requestinginformation about "[c]laims (including names) which have exceeded$50,000 in the past twelve months and those expected to exceed$50,000 in the next twelve months with diagnosis andprognosis," Id. (emphasis in original), should not have beenrelied upon by Trustmark, essentially because ASL never conveyed theletter to Citizens, Citizens' Mem. of Law in Opp'n [doc. #88] at 6-11. Inlight of the fact that Citizens also failed to divulge the Leggett claimon the Disclosure Notice, the question of knowing and materialmisrepresentation remains to be determined at trial, and this Court willnot now decide the issues that Citizens raises surrounding the RMTSletter.Page 15

B. The Grimme Claim

Although Trustmark does not move for summary judgment as to the Grimmeclaim, Citizens does move for summary judgment on its third cause ofaction as to the Grimme claim, arguing that because Mr. Grimme wascovered by the policy (which is itself contested, see supra note1), and because "Trustmark cannot demonstrate that any . . . allegedomission was knowingly made, Trustmark's arguments andaffirmative defenses fail as a matter of law." Citizens' Mem. of Law[doc. #75] at 20. As noted in the discussion of the Leggett claim, thequestion whether an omission was knowingly made is inherently a questionof fact. As there is a genuine dispute of material fact as to whetherCitizens knowingly omitted the Grimme claim, summary judgment on thisclaim is denied.

C. The CUIPA/CUTPA Claims

Trustmark moves for summary judgment on the CUIP A and CUTPA claims aswell. Citizens' Amended Complaint alleges that Trustmark engaged inunfair claim settlement practices as "a general business practice,"involving misrepresentations of the terms of the insurance policy andrefusal to pay legitimate claims, Amend. Compl. ¶ 127-141, and"knowingly, purposefully, and misleadingly engaged in reckless and wantonconduct" regarding the claims. Id. ¶ 145. It is clear thatthe CUIP A and CUTPA violations stand or fall together. See Martin v.Am. Equity Ins. Co., 185 F. Supp.2d 162, 168 (D.Conn. 2002)("Although plaintiff may bring a private cause of action under CUTPA foran alleged violation of CUIPA, she may not bring an action under CUTPAunless the alleged unfair insurance practice violates CUIP A."). It isalso clear that, like the other causes of action relating to the Leggettand Grimme claims thatPage 16implicate these issues, the questions of misrepresentation and thelegitimacy of the claims presents a disputed issue of material fact andis properly the province of the jury. Trustmark's motion for summaryjudgment on the sixth and seventh causes of action with regard to theseclaims is denied.

D. The Claims Against RMTS

RMTS moves for summary judgment on all of the causes of action thatCitizens has brought against RMTS, on the grounds that it never enteredinto a contractual relationship with Citizens. Citizens has agreed todismiss the first, second, third, and fourth causes of action againstRMTS, but continues to press the remaining counts. These allege that RMTSbreached its implied covenant of good faith and fair dealing and violatedCUIPA and CUTPA. RMTS asserts that, as a breach of covenant of good faithand fair dealing must stem from the existence of a contract, Hoskinsv. Titan Value Equities Group, Inc., 252 Conn. 789, 793 (Conn. 2000)("[T]he existence of a contract between the parties is a necessaryantecedent to any claim of breach of the duty of good faith and fairdealing."), and it is clear that RMTS was not a party to any contractwith Citizens, Citizens' Local Rule 9(c)(2) Statement [doc. #89], ¶84, 85, RMTS did not owe such a duty to Citizens and thus could not havebreached any such duty.

Citizens argues in response that RMTS' undisputed status as Trustmark'sagent in these proceedings allows it to be sued for breach of thecovenant of good faith and fair dealing. The parties agree that adisclosed agent such as RMTS cannot be sued in contract but can be suedfor its tort; see Scribner v. O'Brien, Inc., 169 Conn. 389, 404(Conn. 1975) ("Where, however, anPage 17agent or officer commits or participates in the commission of atort, whether or not he acts on behalf of his principal or corporation,he is liable to third persons injured thereby."); they disagree, however,on whether a cause of action for breach of implied covenant of good faithand fair dealing sounds more in contract than in tort. Connecticut courtshave explicitly stated that the breach of the covenant of good faith andfair dealing creates a distinct tort cause of action. The ConnecticutSuperior Court quotes the California case of Gruenberg v. Aetna Ins.Co., 9 Cal.3d 566 (1973), "[I]n every insurance contract there isan implied covenant of good faith and fair dealing. The duty to so act isimmanent in the contract whether the company is attending to the claimsof third persons against the insured or the claims of the insured itself.Accordingly, when the insurer unreasonably and in bad faith withholdspayment of the claim of its insured, it is subject to liability in tort."The Court concludes: "This court likewise adopts the Gruenbergrule." Grand Sheet Metal Products Co. v. Protection Mut. Ins.Co., 34 Conn. Sup. 46, 47-48, 51 (Conn. Sup.Ct. 1977); seealso Buckman v. People Express, Inc., 205 Conn. 166, 171 (1987).

It is clear that the interaction between Citizens and RMTS occurredwithin the context of a contractual relationship, even if RMTS' role inthe relationship was not as a party but as the agent of a contractingparty. As the agent of a party who had a duty of good faith based on acontract, RMTS also effectively had such a duty in its interactions inthe contractual relationship. RMTS seems to recognize this itself: "Theissue here is not whether Citizens could bring its suit against RMTS; theissue is whether following discovery in this matter, any genuine issue ofmaterial fact exists with regard to RMTS's liability to Citizens fordamages purportedly relating to the Leggett or Lonquist claims." RMTS'Reply [doc. #93] at 5-6. This Court finds that Citizens has madeallegations to raise a genuine issue of material fact as to whether RMTSbreached thisPage 18duty in its capacity as Trustmark's agent, See Amend.Compl. [doc. #53], ¶ 120-124, and denies the motion for summaryjudgment.

With regard to the CUIPA and CUTPA claims, RMTS again asserts thatCitizens makes no claim of "independent wrongdoing" on its part, RMTS'Reply [doc. #93] at 4, while Citizens maintains that RMTS can be liableon the basis of its actions as Trustmark's agent, and does assertwrongdoing on RMTS' part of this kind. Amend. Compl. [doc. #53], ¶126-147. The CUTPA and CUIPA causes of action are based in part on apractice offending "public policy as it has been established by statutes,the common law, or otherwise — whether, in other words, it iswithin at least the penumbra of some common law, statutory, or otherestablished concept of unfairness." Sportsmen's Boating Corp. v.Hensley, 192 Conn. 747, 756 (Conn. 1984). Here, RMTS can be liableas Trustmark's agent for CUIPA and CUTPA violations since the allegedunfairness and breach of public policy stems from the tort alleged inPlaintiff's claim of breach of implied duty of good faith and fairdealing and the Connecticut Supreme Court, as noted supra, hasheld that agents can be liable for torts they commit on behalf of theirprincipals, see Scribner, 169 Conn, at 404. Since a materialissue of disputed fact exists as to whether these torts were committed,see supra at 17, RMTS' motion for summary judgment as to thesecauses of action is denied.

E. The Lonquist Claim

Both parties have moved for summary judgment with regard to the causesof action surrounding the Lonquist claim. Citizens seeks a declaratoryjudgment that Mr. Lonquist was included within the 2000 policy subject toa deductible of $100,000, because Citizens argues thatPage 19the Lonquist Laser was invalid. Trustmark seeks dismissal of allthe Lonquist causes of action based on both Citizens' allegedmisrepresentation, and resulting material breach, as well as on the basisof the Lonquist Laser, which effectively excludes his claims from thepolicy. At argument the parties agreed that if the Court determines thatthe Lonquist Laser constituted a valid amendment of the Trustmark policy,the Court need not reach Citizens' causes of action regarding Trustmark'sdenial of the Lonquist claim nor Trustmark's allegations that Citizenmade misrepresentations regarding the Lonquist claim. See New EnglandPetroleum Corp. v. Groppo, 214 Conn. 444, 450 (Conn. 1990) ("Awritten contract can be modified by a subsequent parol agreement if thatis the intention of the parties, because the parties to a writtencontract retain the power to alter or vary or discharge any of itsprovisions by a subsequent agreement.") (internal quotes omitted).

There seems to be no dispute that the March 6 Agreement betweenCitizens and Trustmark, in which the parties agreed upon the premium forthe policy renewal and also agreed upon the Lonquist Laser, ordinarilywould constitute a valid contract. The standard for creating a contractis well settled. "To form a valid and binding contract in Connecticut,there must be a mutual understanding of the terms that are definite andcertain between the parties. To constitute an offer and acceptancesufficient to create an enforceable contract, each must be found to havebeen based on an identical understanding by the parties. If the minds ofthe parties have not truly met, no enforceable contract exists. Anagreement must be definite and certain as to its terms and requirements."L & R Realty v. Connecticut Nat'l Bank, 53 Conn. App. 524,534-535 (Conn. App. 1999) (internal quotations omitted). Here, there wasan offer by Trustmark, an acceptance by Citizens, intent by the partiesto form a contract, a meeting of the minds about its terms,Page 20definite terms, and consideration. See J.A. [doc. #68],Ex. 45. Under traditional contract principles, therefore, the March 6Agreement unquestionably would qualify as a valid amendment to theexisting insurance contract between the parties.

However, Citizens maintains that, whatever the amendment's status underConnecticut contract law generally, the amendment is not a validamendment under the terms of the original insurance contract. Thatcontract states as follows: "All changes in the Contract must be approvedby an officer of the Company and be evidenced by an endorsement on theContract or by an amendment to the Contract signed by the ContractHolder." Id. Ex. 21 at 10.3 Citizens concedes that the March6 Agreement was approved by an officer of Trustmark and signed by anofficer of Citizens, but Citizens argues that the terms of the March 6Agreement were never reflected in an "endorsement" on or "amendment" tothe Contract, as required by the policy language. In support of itsargument, Citizens cites to an amendment executed by Trustmark on May 23,2000, which is set forth on a form entitled "AMENDMENT" and whichspecifies that it is "[a]ttached to and forming part of the insurancepolicy. Id. Ex. 48. Since the Lonquist Laser was not set forthon such an AMENDMENT form, Citizens argues that it is not effective underthe terms of the policy.

Trustmark responds that the term "amendment" is not defined in theinsurance contract and therefore an amendment can be accomplished in anymanner that is sufficient under state lawPage 21to bind parties. Furthermore, in an uncontested affidavit submittedwith its summary judgment motion, Trustmark represents that the company"does not customarily include information regarding lasers or increasedretention levels of covered persons in an `amendment page.' Such pagesgenerally reflect only any changes to the premiums charged during asubsequent policy year." Aff. of Henry Trevor, Trustmark's Mem. in Opp'nto Summ. J. [doc. #85], Ex. F. ¶ 18.

Unlike the other issues discussed above, there is no dispute of factsregarding this issue, and therefore, the Court can rule on the validityof the Lonquist Laser as a matter of law. Both sides agree that anagreement was reached and what that agreement specifies. The sole pointof contention is whether the agreement constitutes a valid amendmentunder the terms of the insurance policy. Based upon the evidencesubmitted by the parties, the Court concludes that the Lonquist Laser isa valid and effective amendment of the parties' insurance policy.Although the policy defines many of its terms, it does not define theterm "amendment"; nor does anything in the policy specify precisely whatan amendment must look like, other than that it must be approved byTrustmark and signed by Citizens, both of which occurred here.

"Connecticut courts have consistently referred to dictionarydefinitions to interpret words used in insurance contracts."Middlesex Mutual Assurance Co. v. Walsh, 218 Conn. 681, 695 n. 7(1991) (internal quotation and citation omitted). The ordinary meaning ofthe term "amendment" is "a change made by correction, addition, ordeletion." See Random House Webster's Unabridged Dictionary 66(2001). That is precisely what occurred here, when the parties knowinglyagreed, in return for good and valuable consideration, to alter or changethe terms ofPage 22the original 2000 renewal by deleting or removing the Lonquistclaim from the 2000 policy.4

Citing to the May 2000 Amendment, Citizens suggests that the term"amendment" in the policy must be a term of art that requires aparticular form. But there is no evidence other than the May 2000Amendment itself to support Citizens' assertion. Trustmark explained inaffidavits that its customary business practice was not to include laseragreements, such as the Lonquist Laser, in formal "amendment" pages suchas the May 2000 Amendment. Trustmark's affidavit is unrebutted anduncontradicted by Citizens. It is Citizen's burden, as the party opposingsummary judgment and seeking to invalidate an otherwise valid contract,to demonstrate that the Lonquist Laser was ineffective under the policy,or at least that there exists a genuine issue of material fact regardingthe effect of the Lonquist Laser. See, e.g., Anderson, 477 U.S.at 248 ("A party opposing a properly supported motion for summaryjudgment may not rest upon the mere allegations or denials of hispleadings, but . . . must set forth specific facts showing that thereis a genuine issue for trial.") (internal quotations and citationsomitted). That is a burden that Citizens has not discharged.

Accordingly, under the plain language of the contract, the Courtconcludes that any agreement that meets the requirements necessary toform a contract under state law and that is signed and approved by bothparties satisfies the requirements of the policy and is a valid andenforceable amendment. Because the Lonquist Laser set forth in the March6 Agreement unquestionably meets that standard, it is a valid amendmentof the parties' insurance contract.Page 23

Citizens' final contention is that if the amendment is valid under theterms of the contract, it was procured under circumstances constitutingduress and is thus invalid. The standard for claims of duress inConnecticut is clear: "For a party to demonstrate duress, it must prove[1] a wrongful act or threat [2] that left the victim no reasonablealternative, and [3] to which the victim in fact acceded, and that [4]the resulting transaction was unfair to the victim." Noble v.White, 66 Conn. App. 54, 59 (Conn. App. 2001) (internal quotationsomitted). Noble also sets out the standard for what constitutesa "wrongful" act: "Where a party insists on a contractual provision or apayment that he honestly believes he is entitled to receive, unless thatbelief is without any reasonable basis, his conduct is not wrongful anddoes not constitute duress or coercion under Connecticut law."Id.

Thus, to prove duress, Citizens must, as an initial matter, convince ajury that there was no reasonable basis whatsoever for Trustmark tobelieve that Citizens had made a material misrepresentation regarding theLonquist claim and therefore was in breach of the contract. Here,Citizens submitted the Lonquist claim — a single claim thatrepresented approximately 150% of the annual cost of the entirepolicy — one day after ASL had communicated Citizens' acceptance ofthe renewal and acknowledgment that Citizens knew of no claims that mightexceed $100,000 in the coming year. On the basis of this undisputedevidence, this Court holds that no reasonable jury could find thatTrustmark's position was wrongful as that term is defined underConnecticut law. See Hellstrom v. U.S. Dept of Veterans Affairs,201 F.3d 94, 97 (2d Cir. 2000) ("[I]f after discovery, the nonmovingparty has failed to make a sufficient showing on an essential element of[its] case with respect to which [it] has the burden of proof," summaryjudgment is appropriate). While Trustmark's position ultimately might ormight not have beenPage 24sustained by a court or jury, no reasonable person on the basis ofthe record presented could conclude that Trustmark's position's was"without any reasonable basis," as Connecticut law requires. See,e.g., Weiner v. Minor, 124 Conn. 92, 95 (1938) ("Where one insistson a payment which he honestly believes he is entitled to receive,certainly unless that belief is without any reasonable ground, hisconduct is not wrongful and does not constitute duress"); Noble,66 Conn. at 59.

The Court is fortified in this belief by the result of theNoble case, in which the Appellate Court of Connecticut reverseda trial court decision finding duress in a case where an attorneyallegedly coerced the signing of a new payment agreement on thecourthouse steps on the day of a foreclosure hearing by threatening hewould not proceed with the representation unless the agreement wassigned. Id. The Appellate Court found that the discussion on thecourthouse steps was not the first time the new payment agreement waspresented to the clients and that the contract was actually signed fourdays before the hearing. Id. at 60. The absence of immediacyraised doubts about the duress finding, id., especially, thoughthe Appellate Court does not explicitly say so, the question whether theclient actually had no reasonable alternative.

Here too, the Court concludes that no reasonable jury could find thatCitizens had no reasonable alternative but to accept the Trustmarkproposal in March of 2000. Citizens is a multi-billion dollar companythat negotiated for weeks with Trustmark with the assistance ofsophisticated counsel. It is undisputed that Citizens had alternativesthat it could have pursued rather than accepting Trustmark's offer. Forexample, Citizens could have sued Trustmark and sought a declaratoryjudgment regarding the parties' respective rights under the originalcontract. Moreover, Citizens also could have secured alternativeinsurance from other providers thatPage 25would have minimized its risks while Citizens pursued a lawsuitagainst Trustmark. The record shows that Citizens explored that optionand obtained quotations from at least two other insurance providers.While each of those insurers would have charged more for the policy thanTrustmark, the difference between Trustmark's offer and the otherquotations is approximately $100,000, an amount that the billion-dollarCitizens readily could have afforded. See Restatement Contracts2d § 175, Comment b ("In the case of a threatened denial of neededgoods or services, the availability on the market of similar goods orservices may afford a reasonable means of avoiding the threat").

The record shows that Citizens (represented by counsel) activelynegotiated with Trustmark over a bona fide dispute regarding the Lonquistclaim, and chose to accept Trustmark's proposal over other reasonablealternatives that Citizens had available to it. Citizens must now livewith the consequences of its decision. The Court finds that Citizens hasnot demonstrated duress, and accordingly, grants summary judgment toTrustmark on all causes of action relating to the Lonquist claim.

F. ASL

As noted above, ASL's motion for summary judgment on the ninth andtenth causes of action is unopposed and is granted. Furthermore, ASL'smotion for summary judgment on the eighth cause of action is maintainedonly to the extent Citizens is granted summary judgment on the thirdcause of action. Because Citizens' motion for summary judgment on thethird cause of action is denied, ASL's motion for summary judgment on theeighth cause of action is denied as well.Page 26

Accordingly, Plaintiff's Motion for Summary Judgment [doc. #73] isDENIED; Trustmark's Motion for Summary Judgment [doc. #63] is GRANTED inpart and DENIED in part; RMTS's Motion for Summary Judgment [doc. #65] isGRANTED in part and DENIED in part; and ASL's Motion for Summary Judgment[doc. #70] is GRANTED in part and DENIED in part. Following theserulings, the causes of action that remain in this case and therefore mustbe tried are the following: the third cause of action against Trustmark;the fourth cause of action against Trustmark; the fifth cause of actionagainst both Trustmark and RMTS with regard to the Leggett and Grimmeclaims only; the sixth and seventh causes of action against bothTrustmark and RMTS with regard to the Leggett and Grimme claims only; andthe eighth cause of action against ASL.

IT IS SO ORDERED.

1. There is a dispute between the parties (which this Court does notresolve on these motions) about whether Mr. Grimme was a "covered person"under the Trustmark insurance policy. Citizens points to the definitionof "Covered Person" in the Stop Loss Insurance Contract, which "means anemployee of the Contract Holder or a dependent of such employee who iseligible for benefits under the Plan." Farrall Decl. ¶ 22, Ex. D.[doc. #77], at 4. Trustmark asserts that Citizens amended its Plan inOctober 1999 to "grandfather" employees on Long-Term Disability such asMr. Grimme into the Plan, and did not forward the "grand fathering"amendment to Trustmark or otherwise inform Trustmark that it had amendedthe Plan. Trustmark's Mem. In Opp. To PL's Mot. For Partial Summ. J.[doc. #85] at 6; Ex. E, § 24.5. Accordingly, pursuant to Part IV ofthe Insurance Contract, which governs "Change of Plan Exposure,"Trustmark argues that it was not bound by the Amendment. Farrall Decl.¶ 22, Ex. D. [doc. #77], at 6. Citizens responds that Mr. Grimme waseligible for benefits under the Plan at the time Citizens applied for the1999 policy. Citizens' Reply Brief [doc. #92] at 10.

2. Trustmark asserts that the references to the "1/1/99 to 12/31/99contract period" are typographical errors and should have been understoodto refer to the 1/1/00 to 12/31/00 contract period as the intent was todetermine the premium for the 2000 policy. Mem. of Law [doc. #64] at 17n.13. Citizens disputes this characterization. Citizens Mem. of Law inOpp'n to Summ. J. [doc. #88], at 33.

3. The policy also specifies that "[t]his Contract contains all theagreements between the Contract Holder and the Company. Its terms may notbe changed or waived except by amendment issued by the Company," J.A. Ex.21 at 6. Though Citizens initially argued that this merger clause barredconsideration of the documents constituting the March 6 Agreement, atoral argument Citizens did not pursue this argument and rightly so in theCourt's view. Instead, Citizens asserted that the agreement reached bythe parties was not effective under the terms of Trustmark's ownpolicy.

4. Citizens argues that Connecticut courts generally construecontracts against the insurer in cases of ambiguity. Though this may becorrect, it is irrelevant here as the March 6 agreement was clearlyintended to amend the original contract and thus qualifies as an"amendment" in the absence of any evidence which would indicate that theterm "amendment" was in any way ambiguous.

MEMORANDUM OF DECISION

Citizens Communications ("Plaintiff or "Citizens") brings this actionagainst Defendants Trustmark Insurance ("Trustmark"), RMTS Associates("RMTS"), and American Stop Loss Insurance Brokerage Services ("ASL"),seeking declaratory relief and damages stemming from a dispute overDefendants' alleged breach of contractual insurance coverage obligations.All of the parties have filed motions for summary judgment [docs. #63,65, 70, 73]. For the reasons stated below, Plaintiff's Motion for SummaryJudgment [doc. #73] is DENIED; Trustmark's Motion for Summary Judgment[doc. #63] is GRANTED in part and DENIED in part; RMTS's Motion forSummary Judgment [doc. #65] is GRANTED in part and DENIED in part; andASL's Motion for Summary Judgment [doc. #70] is GRANTED in part andDENIED in part.

I.

The dispute arises from a contract between Citizens and Trustmark forTrustmark to supply medical stop-loss insurance to Citizens. Stop-lossinsurance is purchased primarily byPage 2large corporations that self-insure their employees. The insurancereimburses the corporation for claims paid under its self-funded plan,usually pursuant to a high deductible. The primary purpose of stop-lossinsurance is to avoid the risk of a single catastrophic claim. Citizens,as the seventh largest telephone company in the United States, withassets of nearly $7 billion (for the year ending Dec. 31, 2000), and withabout 5000 employees, provides health insurance to its employees undersuch a self-funded health plan (the "Plan"). Citizens' Mem. of Law inSupp. Of Summ. J. [doc. #75], at 3; Trustmark's Local Rule 9(c)(1)Statement [doc. #67] ¶ 1. This case involves disputes betweenCitizens and its stop-loss insurance provider, Trustmark, forreimbursement of medical expenses incurred by three individuals (PatrickLeggett, Thomas Grimme, and Garry Lonquist) who were beneficiaries of theCitizens Plan.

In July 1998, Citizens, through the third-party administrator of thePlan — North American Benefits Network ("NABN") — hiredDefendant ASL to serve as Citizens' broker for acquiring medicalstop-loss insurance. Amend. Compl. [doc. #53] ¶ 16. ASL was to obtainrate quotations for stop-loss insurance with a $100,000 deductible thatwould reimburse Citizens for hospital and medical claims paid pursuant tothe Plan. Id. In October 1998, ASL requested a rate quotationfrom RMTS, a company that markets the insurance products of othercompanies. Id. ¶ 19, 20.

The 1999 Policy. RMTS provided ASL with a rate quotation fromTrustmark for the specific stop-loss insurance policy ASL had requested.Id. ¶ 22. Trustmark is an insurance company that issuesstop-loss insurance coverage as well as other insurance products.Trustmark's Local Rule 9(c)(1) Statement [doc. #67] ¶ 4. In its ratequotation, dated October 15, 1998, RMTS presented Trustmark's offer toASL, stating that the proposed coverage was contingent on RMTS (andTrustmark) receiving certain information from Citizens about thePage 3persons to be covered by the policy. Id. ¶¶ 15-19.Specifically, Trustmark requested identification of Citizens "[e]mployeesand/or dependents currently disabled, under long-term treatment or onCOBRA." Id. ¶ 18. Additionally, Trustmark requestedinformation about "[c]laims (including names) which have exceeded$50,000 in the past twelve months and those expected to exceed$50,000 in the next twelve months with diagnosis andprognosis." J.A. [doc. #68] Ex.6 (emphasis in original). RMTS stated inbold-face type on the October 15, 1998 quotation that this informationwas "required in order for [it] to evaluate the risk and complete theapplication," and stated that any proposed coverage was "contingent uponRMTS receiving the [ ] information" requested. Id. Apparently,ASL never asked Citizens to provide any of this information. Trustmark'sLocal Rule 9(c)(1) Statement [doc. #67] ¶ 23; Citizens' LocalRule 9(c)(2) Statement [doc. #89] 123.

However, ASL did request (through NABN) certain information fromCitizens in a November 25, 1998 letter, in which ASL stated that itrequired, among other documents, a "[c]ompleted and signed disclosurestatement." J.A. [doc. #68] Ex. 8. NABN requested the information fromCitizens in a letter dated December 15, 1998, asking that Citizenscomplete the Supplementary Contract Data Sheet for General Informationand advising Citizens that the Data Sheet would act as a DisclosureNotice. Id. Ex. 9. The Disclosure Notice included eightquestions designed to identify claims already in process as well as otherpotentially large claims involving individuals covered under the CitizensPlan. Question #7 of the Disclosure Notice asked whether "any employee ordependent now enrolling for coverage had any medical condition(s) forwhich expenses have exceeded $10,000 in the past twelve months or whichmight be expected to exceed $10,000 in the next twelve months?"Id. Ex. 9 at 1832.Page 4

Marianne Seyler was at the time the Citizens benefits specialistresponsible for providing information to insurance vendors. It isundisputed that in response to Question #7, Ms. Seyler did not discloseany employees or dependents for which medical expenses might be expectedto exceed $10,000 in 1999, although Ms. Seyler testified at herdeposition that she understood that to be what Trustmark was asking forin Question # 7. Id. Ex. 11; Citizens' Local Rule 9(c)(2)Statement [doc. #89], ¶ 26, 27. Ms. Seyler did provide informationabout Citizens employees and dependents who had incurred claims in excessof $75,000 in 1998. J.A., Ex. 11. JoAnn Farrall, Citizens' Director ofCorporate Benefits and a Vice President of the company, signed theDisclosure Notice and mailed it to ASL on December 29, 1998, whichforwarded it along to RMTS. Id. Neither Ms. Farrall nor Ms.Seyler advised Trustmark or RMTS that they were unable to obtaininformation fully responsive to Question #7. Dep. Of Marianne Seyler,J.A. [doc. #69] Ex. 61, at 275-76.

Trustmark issued a medical stop loss insurance policy to Citizens,effective January 1, 1999, providing for an individual deductible of$100,000 with a 15/12 basis, which means that when the expenses for acovered individual exceeded $100,000 in claims paid by Citizens during1999 for services rendered either in 1999 or the last three months of1998, the claim would be eligible for reimbursement under the Trustmarkpolicy. J.A. [doc. #68] Ex. 7. The quoted monthly rate for the Trustmarkpolicy was determined based upon information provided by Citizens and itsagents during the underwriting process. Id.

Patrick Leggett, an insulin-dependent diabetic spouse of a Citizensemployee, was placed on a waiting list for a pancreatic transplant atsome time in 1996 or 1997, and the procedure was pre-certified byCitizens at that time to be covered by the Citizens Plan. Citizens' LocalRulePage 59(c)(2) Statement, ¶ 43. Mr. Leggett was not disclosed byCitizens on the Disclosure Form in response to the question aboutexpected claims over $10,000 in 1999, Id. ¶ 48, althoughCitizens acknowledges that at least Ms. Farrall of Citizens knew aboutMr. Leggett's medical situation at the time Citizens submitted theDisclosure Form. Id. ¶ 47. Mr. Leggett underwent apancreatic transplant on April 4, 1999, Id. ¶ 44, andincurred $139,536.34 in medical expenses for treatments relating to thetransplant between April 1 and April 14, 1999. Id. ¶ 45.

On behalf of Citizens, NABN submitted to Trustmark on October 8, 1999 arequest for reimbursement for $115,121.48 for Mr. Leggett's medicalbills. Id. ¶ 49. RMTS requested additional information fromNABN regarding the Leggett claim on November 12, December 1, December 14,1999, and January 13, 2000. Id. ¶ 50. In February 2000,NABN, again on behalf of Citizens, submitted to Trustmark another requestfor reimbursement for Mr. Leggett's medical bills, in the amount of$46,369.58. Id. ¶ 51. On April 7, 2000, RMTS, on behalf ofTrustmark, informed ASL that it had concerns about whether Mr. Leggett'smedical situation should have been disclosed during the underwritingprocess and that it planned to audit the claim for Mr. Leggett's expensesto determine whether disclosure was required. Id. ¶ 52, 53.In a letter dated December 15, 2000, and sent by RMTS to NABN on December20, 2000, Trustmark denied reimbursement for the Leggett claim on theground that Mr. Leggett should have been disclosed during theunderwriting process. Id. ¶ 54.

Thomas Grimme was a Citizens employee in 1999 and was a beneficiary ofthe Citizens Plan. Citizens' Local Rule 9(c)(1) Statement [doc. #74],¶ 12. Mr. Grimme had been on long-term disability since June 1, 1998,suffering from a "chordoma," a malignant brain tumor that typicallyrecurs. Trustmark's Mem. In Opp. To Pl.'s Mot. For Partial Summ. J. [doc.#85] at 6. Citizens didPage 6not disclose Mr. Grimme as an employee whose medical expenses werelikely to exceed $10,000 in 1999. On February 28, 2000, ASL requestedreimbursement for Mr. Grimme's 1999 medical expenses paid by the Plan.After an audit, Trustmark denied the claim on December 15, 2000, bothbecause the claim had not been disclosed in the underwriting process andbecause Trustmark maintains that Mr. Grimme was not covered by the stoploss insurance contract. J.A. [doc. #68], Ex. 50, at 748-49.1

On October 21, 1999, the doctor for Garry Lonquist, a Citizensemployee, requested pre-certification of aortic valve replacement surgeryand mitral valve replacement surgery. Mr. Lonquist underwent cardiaccatherization on October 29, 1999, which confirmed the need for the valvereplacement surgery. Gateway, Citizens' case management provider,pre-certified Mr. Lonquist's surgery, along with five days ofhospitalization, and he was admitted to the hospital on November 29,1999. Trustmark's Mem. of Law [doc. #64] at 15-16. The surgery took placeon November 30, 1999. On December 8, 1999, Gateway learned that Mr.Lonquist had been experiencing complications and remained unstable fordischarge. Id. at 16. Gateway further learned on December 9 thatMr. Lonquist had undergone sternal wound debridement and onPage 7December 13 learned that Mr. Lonquist was in intensive care on aventilator and recovering from a staph infection. Id. By thispoint, NABN had scanned into its computer system bills totalingapproximately $222,000 for Mr. Lonquist's medical care. Citizens' LocalRule 9(c)(2) Statement [doc. #89], ¶ 63. At this point, Gatewayrequested authorization of "case management" from Citizens, which is a"red flag" that the claim will be an increased amount of money.Id. ¶ 64, 65. Case management was authorized on December 15,1999. Id. ¶ 66.

The 2000 Renewal. Meanwhile, in September 1999, ASL hadnotified RMTS that Citizens intended to renew the Trustmark stop-lossinsurance policy for 2000. Trustmark's Mem. of Law [doc. #64] at 15. In aletter dated September 22, 1999, RMTS informed ASL that the 2000 renewalwould be capped at an increase of no more than 5% over the 1999 Trustmarkpolicy, and that RMTS required confirmation that "as of November 30,[1999,] RMTS has received notification on all known claimantswith the potential to exceed the $100,000 Specific deductible for the1999 contract period and any existing claims with the potential to exceedthe Specific deductible for the 2000 contract period based on diagnosisand paid/pending claims." J.A. [doc. #68], Ex.14 (emphasis in original).On December 7, 1999, RMTS sent ASL a follow-up letter, reiterating thatthe "renewal is based on the assumption that there are no other claims,except the claims and potential claims [already identified], which willexceed the $100,000 Specific deductible for the 1/1/99 to 12/31/99contract period and that there are no currently developing claims withthe potential to exceed the $100,000 Specific deductible for the 1/1/99to 12/31/99 contract year based upon diagnosis and/or pending claims.Should updated claim data prove this assumption to be wrong, we reservethe right to amend the Specific rate and/or set higher individualdeductibles retroactive to the effective date of the renewal contractperiod." Id.Page 8Ex. 19.2

The Trustmark renewal proposal was accepted by John Rowland for ASL onbehalf of Citizens, without identification of any currently developingclaims with potential to exceed $100,000, although the parties disagreeabout the date on which ASL accepted the Trustmark proposal. Citizensclaims the proposal was accepted on December 10, 1999 (the date on whichMr. Rowland signed his acceptance); Trustmark counters that the renewalproposal was not accepted until January 11, 2000 (the date on which ASL'sacceptance was faxed to RMTS). Id. The Court need not resolvethat dispute to dispose of the pending motions.

On January 12, 2000, the day after ASL faxed RMTS the acceptance of the2000 renewal policy, Citizens faxed Trustmark an initial notice of Mr.Lonquist's stop-loss claim in the amount of $1,053,657.44. J.A. [doc.#68], Ex.24. Mr. Lonquist's medical bills ultimately reached $3.1million. Id. Ex.31. Trustmark sent ASL a letter, dated February15, 2000, indicating that "[t]he acceptance of the renewal offer 49 daysafter the precertification request without disclosing this potentialclaimant to RMTS is unacceptable. The failure to make this potential lossknown to RMTS is contrary to the terms of the renewal offer."Id. Ex. 29. Trustmark then offered Citizens two options: eitherCitizens could "accept the rescission of stop loss coverage beginningJanuary 1, 2000," with all premiums returned, or Trustmark would acceptthe renewal with the existing terms and conditions except that the rateincrease would be 30% over the previous year, and the policy wouldinclude a separate $1 million deductible for Garry Lonquist, effectivelyremovingPage 9him from the Plan's coverage because the Plan contained a $1million maximum benefit. Id. This proviso regarding Mr. Lonquistis referred to by the parties as the "Lonquist Laser." Trustmarkindicated that if it did not receive a response to its offer within tendays it would "return the premium and treat the renewal as void."Id.

On February 16, 2000, NABN sent a letter to ASL acknowledging that ASLhad advised it that day that Trustmark was denying the Lonquist claim andwas considering rescinding the policy. Id. Ex. 30. RMTSresponded on February 18, 2000 with additional detail about Trustmark'soffer. In addition to the Lonquist Laser, Trustmark's offer includedhigher deductibles for several other high-risk persons. Id. Ex.32. ASL indicated in response to RMTS's letter that Citizens might acceptTrustmark's initial offer of February 15 with the Lonquist Laser, butCitizens would not accept the renewal with lasers for other individuals.Dep. of David Kalm, J.A. [doc. #69], Ex. 56 at 250-51. On February 22,2000, NABN notified Citizens that Trustmark would not agree to itsproposal, but that Trustmark would convey a new proposal to Citizens soonthereafter. J.A. [doc. #68], Ex. 34. On the afternoon of February 25,NABN faxed to Citizens the terms Trustmark offered for the 2000 renewal,which were effectively the terms of the original 2000 renewal plus theLonquist Laser; Citizens was advised that the offer expired at close ofbusiness that day. Id. Ex. 35. Following discussions thatafternoon, Ms. Seyler of Citizens faxed a letter to Trustmark acceptingthe revised proposal and noting that it had had less than two hours tomake the decision. The letter stated that "[i]n accepting this proposal,the undersigned company does not waive any or all claims it may have withrespect to the excluded individual." Id. Ex. 36.

RMTS responded to Citizens on February 28, stating that Citizens'reservation of rightsPage 10had converted its "acceptance" into a counteroffer. RMTS informedCitizens that Trustmark rejected the Citizens counteroffer but would giveCitizens until March 1 to respond to the Trustmark offer, a deadline thatwas later extended to March 3. Id. Ex. 40, 41. Apparently in anattempt to explore other options for obtaining stop-loss insurance, onMarch 2 ASL forwarded to NABN, on behalf of Citizens, rate quotes forstop-loss insurance from two other insurance providers — Reliastarand American National. Each quote excluded Mr. Lonquist from coverage andhad an annual premium that was approximately $100,000 more expensive thanTrustmark's renewal offer. Id. Ex. 43.

On March 3, Citizens accepted Trustmark's offer and confirmed itsacceptance in a letter dated March 6 from Ms. Farrall, an officer ofCitizens (the "March 6 Agreement"). In her cover letter Ms. Farrallrecited the terms of Trustmark's offer, which included the fact that"Trustmark will set a separate deductible for Mr. Lonquist of $1,000,000.In effect, Trustmark will remove Mr. Lonquist's claims as eligible forSpecific Stop Loss coverage." Id. Ex. 44, 45. Attached to Ms.Farrall's cover letter was a term sheet that also expressly acknowledgedagreement to the Lonquist Laser. Id.

Citizens then proceeded to pay premiums in accordance with the March 6Agreement and to submit claims for reimbursement pursuant to theinsurance contract. See, e.g., J.A. [doc. #69], Ex. 51; Dep. ofHenry Trevor, Ex. 64, at 83-84. Ultimately, Citizens entered into asettlement with the hospitals that had provided care to Mr. Lonquist,under which Citizens paid $800,000 for invoices that exceeded $3 million.Citizens' Local Rule 9(c)(2) Statement [doc. #89] ¶ 80. In October2000, Citizens for the first time informed Trustmark that Citizens didnot consider itself bound by the terms of the March 6 Agreement and thatin particular, Citizens did not considerPage 11itself bound by the Lonquist Laser. Aff. of Henry Trevor, J.A.[doc. #68], Ex.1. ¶ 8.

The original Complaint was filed in the action on May 25, 2001. Compl.[doc. #1]. The Amended Complaint alleges ten causes of action against thedefendants: 1) declaratory judgment against Trustmark and RMTS that Mr.Lonquist was covered by the 2000 renewal policy and that the LonquistLaser was invalid; 2) breach of contract against Trustmark and RMTS withregard to the 2000 renewal; 3) breach of contract against Trustmark andRMTS with regard to the 1999 policy; 4) estoppel against Trustmark andRMTS with regard to the 1999 policy; 5) breach of the implied covenant ofgood faith and fair dealing against Trustmark and RMTS with regard toboth the 1999 policy and the 2000 renewal; 6) violation of theConnecticut Unfair, Deceptive, and Prohibited Insurance Practices Act(CUIPA), Conn. Gen. Stat. § 38a-815, et seq., against Trustmark andRMTS with regard to both the 1999 policy and the 2000 renewal; 7)violation of the Connecticut Unfair, Deceptive, and Prohibited TradePractices Act (CUTPA), Conn. Gen. Stat. § 42-110a, et seq., againstTrustmark and RMTS with regard to both the 1999 policy and the 2000renewal; 8) a claim in the alternative against ASL for negligence withregard to the 1999 policy; 9) a claim in the alternative against ASL fornegligence with regard to the 2000 renewal; and 10) a claim in thealternative of negligent misrepresentation against ASL. Amend. Compl.[doc. #53].

All of the parties have moved for partial summary judgment. Citizensseeks summary judgment on the first and third causes of action. Citizens'Mem. of Law [doc. #75], at 1-3. Trustmark seeks summary judgment on thefirst through seventh causes of action, but only with regard to theLeggett and Lonquist claims. Trustmark's Mem. of Law [doc. #64] at 22.RMTS seeks summary judgment on the first through fifth causes of actionwith regard to all of thePage 12claims, as well as on the sixth and seventh causes of action withregard to the Leggett and Lonquist claims. RMTS's Mem. of Law [doc. #66]at 18. ASL seeks summary judgment on the eighth, ninth, and tenth causesof action. ASL's Mem. in Support of Mot. for Summ. J. [doc. #71] at 4.

II.

Summary judgment is appropriate when there is no dispute as to agenuine issue of material fact and the moving party is entitled tojudgment as a matter of law. Fed.R.Civ.P. 56(c). See Celotex Corp.v. Catrett, 477 U.S. 317, 322-23 (1986). The moving party carriesthe burden of demonstrating that there is no genuine material dispute offact. Carlton v. Mystic Tramp., Inc., 202 F.3d 129, 133 (2d Cir.2000). The Court will address each of the claims individually.

Before discussing the contested motions, there are a number of thesummary judgment motions that are uncontested, and this Court willdispose of them at this time. RMTS's motion for summary judgment on thefirst, second, third, and fourth causes of action is unopposed byCitizens and is, therefore, granted. Citizens' Mem. of Law in Opp'n [doc.#88] at 1. ASL's motion for summary judgment on the tenth cause of actionis granted, absent opposition by Citizens. PL's Supp. Mem. [doc. #103] at2, n.3. Based on Trustmark's representation at oral argument that it willnot pursue any claim that the denial of the Lonquist claims was based inany way on ASL's untimely renewal, ASL's motion for summary judgment onthe ninth cause of action is granted absent objection. Finally, Citizensand ASL agree that the eighth cause of action is tied to the third causeof action; if Citizens' motion for summary judgment on the third cause ofaction isPage 13granted, the eighth cause of action will be dismissed, if it is notgranted, ASL's motion for summary judgment on the eighth cause of actionwill be denied. Id. at 5.

A. The Leggett Claim

Citizens' third and fifth causes of action relate directly to theLeggett claim. Trustmark has moved for summary judgment as to both ofthese causes of action, while Citizens has moved for summary judgment onthe third cause of action alone. Citizens claims that Trustmark and RMTSbreached the stop-loss insurance contract and the duty of the impliedcovenant of good faith and fair dealing by not paying the Leggett claim.Amend. Compl. ¶ 103-105, 117-125. Trustmark argues that Citizens'failure to disclose Mr. Leggett's condition during the underwritingprocess constituted a material misrepresentation and thus a materialbreach of the contract, thereby discharging Trustmark's duties under thecontract. Trustmark's Mem. of Law [doc. #64] at 26-30. Citizens' primaryresponse to this defense is that there was no knowing or materialmisrepresentation. Citizens' Mem. of Law in Opp'n [doc. #88] at 5-6.

It is clear that the question whether Citizens knew or should haveknown about Mr. Leggett's condition is a question of fact which isproperly the province of the jury. See, e.g., McClintock v.Rivard, 219 Conn. 417, 427 (Conn. 1991) ("Whether evidence supportsa claim of fraudulent or negligent misrepresentation is a question offact."). The essence of the dispute here is whether Citizens' knowledgeof Mr. Leggett's need for a pancreas transplant and placement on awaiting list for a pancreas rose to the level of knowledge that his claim"might be expected to exceed $10,000 in the next twelve months" asrequested in the Disclosure Form. J.A. [doc. #68], Ex. 9, at 1832.Citizens points out that Mr. Leggett had been on the pancreas waitinglist for twoPage 14years without receiving a transplant and that as a consequencethere was no reason for Citizens to expect that he would have such atransplant in 1999. Citizens' Mem. of Law in Opp'n [doc. #88] at 12.Trustmark contends that Citizens' knowledge of Mr. Leggett's conditionand its knowledge that a pancreatic transplant would cost more than$10,000 required Citizens to disclose to Trustmark that Mr. Leggett'sclaims might exceed $10,000 for 1999. Trustmark's Reply [doc. #94] at 3.A dispute of this nature, where the parties disagree about what one partyknew at a certain point, unquestionably constitutes a material dispute offact and is exactly what the summary judgment process is designednot to resolve. This Court will leave this question to the jury.See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)("Credibility determinations, the weighing of the evidence, and thedrawing of legitimate inferences from the facts are jury functions, notthose of a judge.").

Citizens also raises a series of additional defenses suggesting variousreasons why the letter from RMTS to ASL seeking identification ofCitizens "[e]mployees and/or dependents currently disabled, underlong-term treatment or on COBRA," J.A. [doc. #68] Ex. 6, and requestinginformation about "[c]laims (including names) which have exceeded$50,000 in the past twelve months and those expected to exceed$50,000 in the next twelve months with diagnosis andprognosis," Id. (emphasis in original), should not have beenrelied upon by Trustmark, essentially because ASL never conveyed theletter to Citizens, Citizens' Mem. of Law in Opp'n [doc. #88] at 6-11. Inlight of the fact that Citizens also failed to divulge the Leggett claimon the Disclosure Notice, the question of knowing and materialmisrepresentation remains to be determined at trial, and this Court willnot now decide the issues that Citizens raises surrounding the RMTSletter.Page 15

B. The Grimme Claim

Although Trustmark does not move for summary judgment as to the Grimmeclaim, Citizens does move for summary judgment on its third cause ofaction as to the Grimme claim, arguing that because Mr. Grimme wascovered by the policy (which is itself contested, see supra note1), and because "Trustmark cannot demonstrate that any . . . allegedomission was knowingly made, Trustmark's arguments andaffirmative defenses fail as a matter of law." Citizens' Mem. of Law[doc. #75] at 20. As noted in the discussion of the Leggett claim, thequestion whether an omission was knowingly made is inherently a questionof fact. As there is a genuine dispute of material fact as to whetherCitizens knowingly omitted the Grimme claim, summary judgment on thisclaim is denied.

C. The CUIPA/CUTPA Claims

Trustmark moves for summary judgment on the CUIP A and CUTPA claims aswell. Citizens' Amended Complaint alleges that Trustmark engaged inunfair claim settlement practices as "a general business practice,"involving misrepresentations of the terms of the insurance policy andrefusal to pay legitimate claims, Amend. Compl. ¶ 127-141, and"knowingly, purposefully, and misleadingly engaged in reckless and wantonconduct" regarding the claims. Id. ¶ 145. It is clear thatthe CUIP A and CUTPA violations stand or fall together. See Martin v.Am. Equity Ins. Co., 185 F. Supp.2d 162, 168 (D.Conn. 2002)("Although plaintiff may bring a private cause of action under CUTPA foran alleged violation of CUIPA, she may not bring an action under CUTPAunless the alleged unfair insurance practice violates CUIP A."). It isalso clear that, like the other causes of action relating to the Leggettand Grimme claims thatPage 16implicate these issues, the questions of misrepresentation and thelegitimacy of the claims presents a disputed issue of material fact andis properly the province of the jury. Trustmark's motion for summaryjudgment on the sixth and seventh causes of action with regard to theseclaims is denied.

D. The Claims Against RMTS

RMTS moves for summary judgment on all of the causes of action thatCitizens has brought against RMTS, on the grounds that it never enteredinto a contractual relationship with Citizens. Citizens has agreed todismiss the first, second, third, and fourth causes of action againstRMTS, but continues to press the remaining counts. These allege that RMTSbreached its implied covenant of good faith and fair dealing and violatedCUIPA and CUTPA. RMTS asserts that, as a breach of covenant of good faithand fair dealing must stem from the existence of a contract, Hoskinsv. Titan Value Equities Group, Inc., 252 Conn. 789, 793 (Conn. 2000)("[T]he existence of a contract between the parties is a necessaryantecedent to any claim of breach of the duty of good faith and fairdealing."), and it is clear that RMTS was not a party to any contractwith Citizens, Citizens' Local Rule 9(c)(2) Statement [doc. #89], ¶84, 85, RMTS did not owe such a duty to Citizens and thus could not havebreached any such duty.

Citizens argues in response that RMTS' undisputed status as Trustmark'sagent in these proceedings allows it to be sued for breach of thecovenant of good faith and fair dealing. The parties agree that adisclosed agent such as RMTS cannot be sued in contract but can be suedfor its tort; see Scribner v. O'Brien, Inc., 169 Conn. 389, 404(Conn. 1975) ("Where, however, anPage 17agent or officer commits or participates in the commission of atort, whether or not he acts on behalf of his principal or corporation,he is liable to third persons injured thereby."); they disagree, however,on whether a cause of action for breach of implied covenant of good faithand fair dealing sounds more in contract than in tort. Connecticut courtshave explicitly stated that the breach of the covenant of good faith andfair dealing creates a distinct tort cause of action. The ConnecticutSuperior Court quotes the California case of Gruenberg v. Aetna Ins.Co., 9 Cal.3d 566 (1973), "[I]n every insurance contract there isan implied covenant of good faith and fair dealing. The duty to so act isimmanent in the contract whether the company is attending to the claimsof third persons against the insured or the claims of the insured itself.Accordingly, when the insurer unreasonably and in bad faith withholdspayment of the claim of its insured, it is subject to liability in tort."The Court concludes: "This court likewise adopts the Gruenbergrule." Grand Sheet Metal Products Co. v. Protection Mut. Ins.Co., 34 Conn. Sup. 46, 47-48, 51 (Conn. Sup.Ct. 1977); seealso Buckman v. People Express, Inc., 205 Conn. 166, 171 (1987).

It is clear that the interaction between Citizens and RMTS occurredwithin the context of a contractual relationship, even if RMTS' role inthe relationship was not as a party but as the agent of a contractingparty. As the agent of a party who had a duty of good faith based on acontract, RMTS also effectively had such a duty in its interactions inthe contractual relationship. RMTS seems to recognize this itself: "Theissue here is not whether Citizens could bring its suit against RMTS; theissue is whether following discovery in this matter, any genuine issue ofmaterial fact exists with regard to RMTS's liability to Citizens fordamages purportedly relating to the Leggett or Lonquist claims." RMTS'Reply [doc. #93] at 5-6. This Court finds that Citizens has madeallegations to raise a genuine issue of material fact as to whether RMTSbreached thisPage 18duty in its capacity as Trustmark's agent, See Amend.Compl. [doc. #53], ¶ 120-124, and denies the motion for summaryjudgment.

With regard to the CUIPA and CUTPA claims, RMTS again asserts thatCitizens makes no claim of "independent wrongdoing" on its part, RMTS'Reply [doc. #93] at 4, while Citizens maintains that RMTS can be liableon the basis of its actions as Trustmark's agent, and does assertwrongdoing on RMTS' part of this kind. Amend. Compl. [doc. #53], ¶126-147. The CUTPA and CUIPA causes of action are based in part on apractice offending "public policy as it has been established by statutes,the common law, or otherwise — whether, in other words, it iswithin at least the penumbra of some common law, statutory, or otherestablished concept of unfairness." Sportsmen's Boating Corp. v.Hensley, 192 Conn. 747, 756 (Conn. 1984). Here, RMTS can be liableas Trustmark's agent for CUIPA and CUTPA violations since the allegedunfairness and breach of public policy stems from the tort alleged inPlaintiff's claim of breach of implied duty of good faith and fairdealing and the Connecticut Supreme Court, as noted supra, hasheld that agents can be liable for torts they commit on behalf of theirprincipals, see Scribner, 169 Conn, at 404. Since a materialissue of disputed fact exists as to whether these torts were committed,see supra at 17, RMTS' motion for summary judgment as to thesecauses of action is denied.

E. The Lonquist Claim

Both parties have moved for summary judgment with regard to the causesof action surrounding the Lonquist claim. Citizens seeks a declaratoryjudgment that Mr. Lonquist was included within the 2000 policy subject toa deductible of $100,000, because Citizens argues thatPage 19the Lonquist Laser was invalid. Trustmark seeks dismissal of allthe Lonquist causes of action based on both Citizens' allegedmisrepresentation, and resulting material breach, as well as on the basisof the Lonquist Laser, which effectively excludes his claims from thepolicy. At argument the parties agreed that if the Court determines thatthe Lonquist Laser constituted a valid amendment of the Trustmark policy,the Court need not reach Citizens' causes of action regarding Trustmark'sdenial of the Lonquist claim nor Trustmark's allegations that Citizenmade misrepresentations regarding the Lonquist claim. See New EnglandPetroleum Corp. v. Groppo, 214 Conn. 444, 450 (Conn. 1990) ("Awritten contract can be modified by a subsequent parol agreement if thatis the intention of the parties, because the parties to a writtencontract retain the power to alter or vary or discharge any of itsprovisions by a subsequent agreement.") (internal quotes omitted).

There seems to be no dispute that the March 6 Agreement betweenCitizens and Trustmark, in which the parties agreed upon the premium forthe policy renewal and also agreed upon the Lonquist Laser, ordinarilywould constitute a valid contract. The standard for creating a contractis well settled. "To form a valid and binding contract in Connecticut,there must be a mutual understanding of the terms that are definite andcertain between the parties. To constitute an offer and acceptancesufficient to create an enforceable contract, each must be found to havebeen based on an identical understanding by the parties. If the minds ofthe parties have not truly met, no enforceable contract exists. Anagreement must be definite and certain as to its terms and requirements."L & R Realty v. Connecticut Nat'l Bank, 53 Conn. App. 524,534-535 (Conn. App. 1999) (internal quotations omitted). Here, there wasan offer by Trustmark, an acceptance by Citizens, intent by the partiesto form a contract, a meeting of the minds about its terms,Page 20definite terms, and consideration. See J.A. [doc. #68],Ex. 45. Under traditional contract principles, therefore, the March 6Agreement unquestionably would qualify as a valid amendment to theexisting insurance contract between the parties.

However, Citizens maintains that, whatever the amendment's status underConnecticut contract law generally, the amendment is not a validamendment under the terms of the original insurance contract. Thatcontract states as follows: "All changes in the Contract must be approvedby an officer of the Company and be evidenced by an endorsement on theContract or by an amendment to the Contract signed by the ContractHolder." Id. Ex. 21 at 10.3 Citizens concedes that the March6 Agreement was approved by an officer of Trustmark and signed by anofficer of Citizens, but Citizens argues that the terms of the March 6Agreement were never reflected in an "endorsement" on or "amendment" tothe Contract, as required by the policy language. In support of itsargument, Citizens cites to an amendment executed by Trustmark on May 23,2000, which is set forth on a form entitled "AMENDMENT" and whichspecifies that it is "[a]ttached to and forming part of the insurancepolicy. Id. Ex. 48. Since the Lonquist Laser was not set forthon such an AMENDMENT form, Citizens argues that it is not effective underthe terms of the policy.

Trustmark responds that the term "amendment" is not defined in theinsurance contract and therefore an amendment can be accomplished in anymanner that is sufficient under state lawPage 21to bind parties. Furthermore, in an uncontested affidavit submittedwith its summary judgment motion, Trustmark represents that the company"does not customarily include information regarding lasers or increasedretention levels of covered persons in an `amendment page.' Such pagesgenerally reflect only any changes to the premiums charged during asubsequent policy year." Aff. of Henry Trevor, Trustmark's Mem. in Opp'nto Summ. J. [doc. #85], Ex. F. ¶ 18.

Unlike the other issues discussed above, there is no dispute of factsregarding this issue, and therefore, the Court can rule on the validityof the Lonquist Laser as a matter of law. Both sides agree that anagreement was reached and what that agreement specifies. The sole pointof contention is whether the agreement constitutes a valid amendmentunder the terms of the insurance policy. Based upon the evidencesubmitted by the parties, the Court concludes that the Lonquist Laser isa valid and effective amendment of the parties' insurance policy.Although the policy defines many of its terms, it does not define theterm "amendment"; nor does anything in the policy specify precisely whatan amendment must look like, other than that it must be approved byTrustmark and signed by Citizens, both of which occurred here.

"Connecticut courts have consistently referred to dictionarydefinitions to interpret words used in insurance contracts."Middlesex Mutual Assurance Co. v. Walsh, 218 Conn. 681, 695 n. 7(1991) (internal quotation and citation omitted). The ordinary meaning ofthe term "amendment" is "a change made by correction, addition, ordeletion." See Random House Webster's Unabridged Dictionary 66(2001). That is precisely what occurred here, when the parties knowinglyagreed, in return for good and valuable consideration, to alter or changethe terms ofPage 22the original 2000 renewal by deleting or removing the Lonquistclaim from the 2000 policy.4

Citing to the May 2000 Amendment, Citizens suggests that the term"amendment" in the policy must be a term of art that requires aparticular form. But there is no evidence other than the May 2000Amendment itself to support Citizens' assertion. Trustmark explained inaffidavits that its customary business practice was not to include laseragreements, such as the Lonquist Laser, in formal "amendment" pages suchas the May 2000 Amendment. Trustmark's affidavit is unrebutted anduncontradicted by Citizens. It is Citizen's burden, as the party opposingsummary judgment and seeking to invalidate an otherwise valid contract,to demonstrate that the Lonquist Laser was ineffective under the policy,or at least that there exists a genuine issue of material fact regardingthe effect of the Lonquist Laser. See, e.g., Anderson, 477 U.S.at 248 ("A party opposing a properly supported motion for summaryjudgment may not rest upon the mere allegations or denials of hispleadings, but . . . must set forth specific facts showing that thereis a genuine issue for trial.") (internal quotations and citationsomitted). That is a burden that Citizens has not discharged.

Accordingly, under the plain language of the contract, the Courtconcludes that any agreement that meets the requirements necessary toform a contract under state law and that is signed and approved by bothparties satisfies the requirements of the policy and is a valid andenforceable amendment. Because the Lonquist Laser set forth in the March6 Agreement unquestionably meets that standard, it is a valid amendmentof the parties' insurance contract.Page 23

Citizens' final contention is that if the amendment is valid under theterms of the contract, it was procured under circumstances constitutingduress and is thus invalid. The standard for claims of duress inConnecticut is clear: "For a party to demonstrate duress, it must prove[1] a wrongful act or threat [2] that left the victim no reasonablealternative, and [3] to which the victim in fact acceded, and that [4]the resulting transaction was unfair to the victim." Noble v.White, 66 Conn. App. 54, 59 (Conn. App. 2001) (internal quotationsomitted). Noble also sets out the standard for what constitutesa "wrongful" act: "Where a party insists on a contractual provision or apayment that he honestly believes he is entitled to receive, unless thatbelief is without any reasonable basis, his conduct is not wrongful anddoes not constitute duress or coercion under Connecticut law."Id.

Thus, to prove duress, Citizens must, as an initial matter, convince ajury that there was no reasonable basis whatsoever for Trustmark tobelieve that Citizens had made a material misrepresentation regarding theLonquist claim and therefore was in breach of the contract. Here,Citizens submitted the Lonquist claim — a single claim thatrepresented approximately 150% of the annual cost of the entirepolicy — one day after ASL had communicated Citizens' acceptance ofthe renewal and acknowledgment that Citizens knew of no claims that mightexceed $100,000 in the coming year. On the basis of this undisputedevidence, this Court holds that no reasonable jury could find thatTrustmark's position was wrongful as that term is defined underConnecticut law. See Hellstrom v. U.S. Dept of Veterans Affairs,201 F.3d 94, 97 (2d Cir. 2000) ("[I]f after discovery, the nonmovingparty has failed to make a sufficient showing on an essential element of[its] case with respect to which [it] has the burden of proof," summaryjudgment is appropriate). While Trustmark's position ultimately might ormight not have beenPage 24sustained by a court or jury, no reasonable person on the basis ofthe record presented could conclude that Trustmark's position's was"without any reasonable basis," as Connecticut law requires. See,e.g., Weiner v. Minor, 124 Conn. 92, 95 (1938) ("Where one insistson a payment which he honestly believes he is entitled to receive,certainly unless that belief is without any reasonable ground, hisconduct is not wrongful and does not constitute duress"); Noble,66 Conn. at 59.

The Court is fortified in this belief by the result of theNoble case, in which the Appellate Court of Connecticut reverseda trial court decision finding duress in a case where an attorneyallegedly coerced the signing of a new payment agreement on thecourthouse steps on the day of a foreclosure hearing by threatening hewould not proceed with the representation unless the agreement wassigned. Id. The Appellate Court found that the discussion on thecourthouse steps was not the first time the new payment agreement waspresented to the clients and that the contract was actually signed fourdays before the hearing. Id. at 60. The absence of immediacyraised doubts about the duress finding, id., especially, thoughthe Appellate Court does not explicitly say so, the question whether theclient actually had no reasonable alternative.

Here too, the Court concludes that no reasonable jury could find thatCitizens had no reasonable alternative but to accept the Trustmarkproposal in March of 2000. Citizens is a multi-billion dollar companythat negotiated for weeks with Trustmark with the assistance ofsophisticated counsel. It is undisputed that Citizens had alternativesthat it could have pursued rather than accepting Trustmark's offer. Forexample, Citizens could have sued Trustmark and sought a declaratoryjudgment regarding the parties' respective rights under the originalcontract. Moreover, Citizens also could have secured alternativeinsurance from other providers thatPage 25would have minimized its risks while Citizens pursued a lawsuitagainst Trustmark. The record shows that Citizens explored that optionand obtained quotations from at least two other insurance providers.While each of those insurers would have charged more for the policy thanTrustmark, the difference between Trustmark's offer and the otherquotations is approximately $100,000, an amount that the billion-dollarCitizens readily could have afforded. See Restatement Contracts2d § 175, Comment b ("In the case of a threatened denial of neededgoods or services, the availability on the market of similar goods orservices may afford a reasonable means of avoiding the threat").

The record shows that Citizens (represented by counsel) activelynegotiated with Trustmark over a bona fide dispute regarding the Lonquistclaim, and chose to accept Trustmark's proposal over other reasonablealternatives that Citizens had available to it. Citizens must now livewith the consequences of its decision. The Court finds that Citizens hasnot demonstrated duress, and accordingly, grants summary judgment toTrustmark on all causes of action relating to the Lonquist claim.

F. ASL

As noted above, ASL's motion for summary judgment on the ninth andtenth causes of action is unopposed and is granted. Furthermore, ASL'smotion for summary judgment on the eighth cause of action is maintainedonly to the extent Citizens is granted summary judgment on the thirdcause of action. Because Citizens' motion for summary judgment on thethird cause of action is denied, ASL's motion for summary judgment on theeighth cause of action is denied as well.Page 26

Accordingly, Plaintiff's Motion for Summary Judgment [doc. #73] isDENIED; Trustmark's Motion for Summary Judgment [doc. #63] is GRANTED inpart and DENIED in part; RMTS's Motion for Summary Judgment [doc. #65] isGRANTED in part and DENIED in part; and ASL's Motion for Summary Judgment[doc. #70] is GRANTED in part and DENIED in part. Following theserulings, the causes of action that remain in this case and therefore mustbe tried are the following: the third cause of action against Trustmark;the fourth cause of action against Trustmark; the fifth cause of actionagainst both Trustmark and RMTS with regard to the Leggett and Grimmeclaims only; the sixth and seventh causes of action against bothTrustmark and RMTS with regard to the Leggett and Grimme claims only; andthe eighth cause of action against ASL.

IT IS SO ORDERED.

1. There is a dispute between the parties (which this Court does notresolve on these motions) about whether Mr. Grimme was a "covered person"under the Trustmark insurance policy. Citizens points to the definitionof "Covered Person" in the Stop Loss Insurance Contract, which "means anemployee of the Contract Holder or a dependent of such employee who iseligible for benefits under the Plan." Farrall Decl. ¶ 22, Ex. D.[doc. #77], at 4. Trustmark asserts that Citizens amended its Plan inOctober 1999 to "grandfather" employees on Long-Term Disability such asMr. Grimme into the Plan, and did not forward the "grand fathering"amendment to Trustmark or otherwise inform Trustmark that it had amendedthe Plan. Trustmark's Mem. In Opp. To PL's Mot. For Partial Summ. J.[doc. #85] at 6; Ex. E, § 24.5. Accordingly, pursuant to Part IV ofthe Insurance Contract, which governs "Change of Plan Exposure,"Trustmark argues that it was not bound by the Amendment. Farrall Decl.¶ 22, Ex. D. [doc. #77], at 6. Citizens responds that Mr. Grimme waseligible for benefits under the Plan at the time Citizens applied for the1999 policy. Citizens' Reply Brief [doc. #92] at 10.

2. Trustmark asserts that the references to the "1/1/99 to 12/31/99contract period" are typographical errors and should have been understoodto refer to the 1/1/00 to 12/31/00 contract period as the intent was todetermine the premium for the 2000 policy. Mem. of Law [doc. #64] at 17n.13. Citizens disputes this characterization. Citizens Mem. of Law inOpp'n to Summ. J. [doc. #88], at 33.

3. The policy also specifies that "[t]his Contract contains all theagreements between the Contract Holder and the Company. Its terms may notbe changed or waived except by amendment issued by the Company," J.A. Ex.21 at 6. Though Citizens initially argued that this merger clause barredconsideration of the documents constituting the March 6 Agreement, atoral argument Citizens did not pursue this argument and rightly so in theCourt's view. Instead, Citizens asserted that the agreement reached bythe parties was not effective under the terms of Trustmark's ownpolicy.

4. Citizens argues that Connecticut courts generally construecontracts against the insurer in cases of ambiguity. Though this may becorrect, it is irrelevant here as the March 6 agreement was clearlyintended to amend the original contract and thus qualifies as an"amendment" in the absence of any evidence which would indicate that theterm "amendment" was in any way ambiguous.

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