In Robert J. Trez v. International Water Safety Foundation, et al, Attorney Tracy L. Montalbano, of Halloran & Sage's Insurance Coverage Group, successfully obtained judgment in favor of the defendants, an insurance agency and agent, following a courtside trial before Judge William Mottolese in the Connecticut Superior Court Judicial District of Norwalk at Stamford.
In 2007, the Plaintiff, Robert J. Trez, obtained insurance for his boat through the non-appearing co-defendants, North American Marine and General Insurance Company ("North American") and International Water Safety Foundation ("IWSF"). Memorandum of Decision, Trez v. International Water Safety Foundation, et al, Docket No. FST CV 08 5008779 S (Superior Court, J.D. of Stamford, December 9, 2010) (Mottolese, J.). On August 17, 2007, shortly after obtaining insurance, the Plaintiff's boat sustained damages in an accident after sunset. Id. at 1. The Plaintiff received a copy of the insurance policy on or about September 1, 2007, at which time he learned that the policy excluded coverage for accidents occurring after sunset. Id. at 1-2. Based upon this exclusion, IWSF did, in fact, deny coverage for the Plaintiff's claim and its denial was upheld following arbitration. Id. at 2.
After the arbitrator upheld IWSF's denial of the Plaintiff's claims, the Plaintiff commenced the present lawsuit against North American and IWSF. Thereafter, the Plaintiff filed a Motion to Cite and asserted claims against P&C Insurance Group, LLC (P&C) and Walter Case. The Plaintiff's only claims against these defendants were pursuant to Conn. Gen. Stat. §38a-275. Id. In pertinent part, this statute provides as follows:
Any contract effective in this state and entered into by an unauthorized insurer in violation of sections 38a-27 and 38a-271 to 38a-278, inclusive, shall be unenforceable by such insurer. If any such unauthorized insurer fails to pay any claim or loss within the provisions of such insurance contract, any person who assisted or in any manner aided directly or indirectly in the procurement of such insurance contract shall be liable to the insured for the full amount of such claim or loss pursuant to the provisions of such insurance contract.
Conn. Gen. Stat. §38a-275 (2010).
On this basis, the Plaintiff alleged that P&C and Case were liable for the damages to his boat for referring him to an unauthorized insurer, IWSF, to obtain insurance for the boat. Through discovery and at trial, however, it became clear that the "key to [this] case is the part which Tomiko [Case's daughter] played in the sequence of events which led to IWSF issuing the binder and later the policy in question." Id. at 3. Thus, the Plaintiff's entire case would rise or fall on whether Case's daughter was an authorized agent of P&C.
As a general matter, "[a]gency is defined as the fiduciary relationship which results from manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act . . . Restatement (Second), 1 Agency § 1." Id. (quoting Beckenstein v. Potter & Carrier, Inc., 191 Conn. 120, 132, (1983)). "Thus, the three elements required to show the existence of an agency relationship include: (1) a manifestation by the principal that the agent will act for him; (2) acceptance by the agent of the undertaking; and (3) an understanding between the parties that the principal will be in control of the undertaking." (Internal quotation marks omitted.) Id. (quoting Beckenstein, supra, 191 Conn. at 133).
The court noted that "it is a general rule of agency law that the principal in any agency relationship is bound by, and liable for, the acts in which his agent engages with authority from the principal, and within the scope of the [agency relationship]." Id. (quoting Maharishi School of Vedic Sciences, Inc. (Connecticut) v. Connecticut Constitution Assocs. Ltd. Partnership, 260 Conn. 598, 606 (2002)). An agent's authority may be actual or apparent and that actual authority may be express or implied. Id. at 606-607. Moreover, implied authority "is the authority which the principal intended his agent possess . . . . Implied authority is a fact to be proven by deductions and inferences from the manifestations of consent of the principal and from the acts of the principal and [the] agent." Id. at 3-4 (quoting Connecticut Nat'l Bank v. Giacomi, 242 Conn. 17, 70 (1997) (internal quotation marks and citations omitted).
With these general principles of agency law in mind, the court then analyzed the testimony and evidence presented at trial. The court found that it was "undisputed that Tomiko was not a licensed insurance agent at the time the plaintiff's insurance was placed with IWSF, [that she] was not an employee of P&C and never had been granted any express authority to act on behalf of P&C for any purpose." Id. at 4. "Because implied authority exists in the absence of express authority there must be evidence which circumstantially proves the authority of the agent through inferences drawn from the actions of the principal." Id. On this basis, the court held that "the plaintiff has failed to prove that either P&C or Case did anything prior to the issuance of the binder or the policy which could be construed as authorizing Tomiko to [act on their behalf]." Id.
Since Tomiko possessed neither express nor implied authority, the court then stated that, in order to recover, "the plaintiff's claim must rest upon the existence of some apparent authority . . . created before the insurance placement was made or upon the doctrine of ratification which occurred after the [insurance was placed.]" Id. at 5. "Apparent authority is that semblance of authority which a principal through his own acts or inadvertances, causes or allows third persons to believe his agent possesses." Id. (quoting Lewis v. Michigan Millers Mut. Ins. Co., 154 Conn. 660, 665 (1976), citing Quint v. O'Connell, 80 Conn. 353, 357 (1915)). As such, "apparent authority is to be determined, not by the agent's own acts, but by the acts of the agent's principal. Id. (quoting Nowak v. Capitol Motors, Inc., 158 Conn. 65, 69 (1969)).
The issue of apparent authority is to be determined based on two criteria. First, it must appear from the principal's conduct that the principal held the agent out as possessing sufficient authority to embrace the act in question, or knowingly permitted the agent to act as having such authority. Second, the party dealing with the agent must have, acting in good faith, reasonably believed, under all the circumstances, that the agent had the necessary authority to bind the principal to the agent's action.
Id. (Internal citations and quotations omitted). At trial, the only evidence presented regarding Tomiko's association with P&C was "testimony that she visited the P&C office from time to time to use the telephone, to drop off her child with her father, and to use the computer and fax machine." Id. at 6. "Likewise, glaringly absent from the evidence is any support for the claim that either P&C or Case engaged in conduct which could reasonably be construed as holding her out as possessing any authority to place an insurance contract or as knowingly permitting her to do so." Id. Since the evidence did not show that any activities undertaken by Tomiko had anything to do with the business of P&C, it was insufficient to warrant the court to hold that apparent authority had been proven. Id.
Based upon the foregoing, the plaintiff could have only prevailed if he proved that P&C or Case ratified Tomiko's conduct. "Ratification is defined as the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account." Id. (quoting Restatement (Second), 1 Agency §82 (1958) (internal quotations omitted). It "requires acceptance of the results of the act with an intent to ratify, and with full knowledge of all material circumstances." Id. (quoting Ansonia v. Cooper, 64 Conn. 536, 544 (1894) (emphasis in original)). In this regard, the plaintiff presented evidence that P&C received a check from Water Safety Services, allegedly representing a recruiter fee, sometime after the alleged referral took place. Id. at 7. However, there was no letter with the check explaining what it was for, and the testimony at trial was that neither Case nor any employee of P&C ever made any connection that the check was related to the plaintiff's loss claim. The court concluded that "while P&C accepted the recruiter fee it did so without full knowledge of all the material circumstances which preceded the issuance of the check." Id. at 8 (internal quotations omitted).
Consequently, the court entered judgment in favor of the defendants as the plaintiff failed to prove, by a preponderance of the evidence, that Tomiko was an agent of P&C or Case.