A federal district court in Connecticut has ruled that homeowners suing their insurance company in a “faulty concrete” case could not add a breach of implied covenant of good faith and fair dealing claim against their insurer to punish it for removing their case to federal court.
The Case On Feb. 9, 2018, Dennis and Erica Moura sued Liberty Insurance Corporation in a Connecticut state court, alleging that it had not honored its obligations under their homeowner’s insurance policy when the Mouras’ basement walls cracked due to allegedly faulty concrete. After the case was removed to federal court, the Mouras filed a motion to add a breach of implied covenant of good faith and fair dealing claim against Liberty.
The Mouras argued that although the Connecticut state court in which they originally filed their action typically had not found the type of conduct engaged in by Liberty in the context of a concrete decay claim sufficient to state a claim for relief on a theory of breach of the implied covenant of good faith and fair dealing, they should be allowed to pursue such a claim as a “consequence” of the “decision to remove this matter” to federal court.
Liberty argued that the Mouras should not be permitted to add an implied covenant claim, pointing out that similar claims had failed in state court.
The District Court’s Decision The district court denied the Mouras’ motion to add the claim against Liberty.
In its decision, the district court explained that, in Connecticut, the majority of contracts included an implied covenant of good faith and fair dealing, which operated as a rule of interpretation to ensure that rights under the contract were not unfairly impeded. The district court added that, to constitute a breach of the implied covenant of good faith and fair dealing, the acts by which an insurer had allegedly impeded the plaintiff’s right to receive benefits that he or she had reasonably expected to receive under the contract had to “have been taken in bad faith.”
The district court observed that the implied covenant of good faith and fair dealing arose entirely out of Connecticut common law. It then noted that, in this case, both sides agreed that Connecticut courts would “typically” reject the Mouras’ claims.
The district court then reasoned that because Liberty and the Mouras were in agreement that the Connecticut state court in which the Mouras’ originally filed their case typically would not find the type of conduct employed by Liberty in the context of a concrete decay claim sufficient to state a claim for relief on a theory of breach of the implied covenant of good faith and fair dealing, the addition by the Mouras of an implied covenant claim was “futile.”
The district court concluded that there was “no legal authority” for the proposition that adding such a claim was appropriate to “punish” an insurer for exercising its right of removal. Accordingly, the district court denied the Mouras’ motion to add the implied covenant claim against Liberty.
The case is Moura v. Harleysville Preferred Ins. Co., No. 3:18-cv-422 (VAB) (D. Conn. Feb. 26, 2019).
Steven A. Meyerowitz, Esq., is Director of FC&S Legal, the Editor-in-Chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc.