State v. Acordia, Inc.
Because CUIPA, the Connecticut Unfair Insurance Practice Act, C.G.S. §38a-815, provides the exclusive and comprehensive source of public policy with respect to general insurance practices, unless an insurance related practice violates CUIPA or, arguably, some other statute regulating a specific type of insurance related conduct, it cannot be found to violate any public policy and, therefore, it cannot be found to violate CUTPA, the Connecticut Unfair Trade Practices Act, C.G.S. §42-110a. The state of Connecticut brought this action against Acordia, Inc., an independent insurance broker, under C.G.S. §42-110m, alleging that the defendant's failure to disclose to clients certain contingent commission agreements with insurance companies violated CUTPA and CUIPA. Following a court trial, the court rendered judgment for the plaintiff, concluding that the defendant's actions violated CUTPA and CUIPA. The defendant appealed, first claiming that the court improperly relied on its conclusion that the defendant breached a fiduciary duty to clients to determine that the defendant violated CUIPA. Agreeing, the Supreme Court reversed the judgment. The trial court improperly concluded that the defendant violated CUIPA and, absent a CUIPA violation, the CUTPA claim failed. C.G.S. §38a-816 defines listed practices in detail and identifies itself as a definitional statute, constraining the discretion of courts to look to other sources in finding a particular insurance practice to be "unfair" in violation of CUIPA. The statutory language was ambiguous but, CUIPA's legislative history demonstrated that the legislature intended to occupy the field of defining unfair insurance practices, thereby precluding courts from incorporating common-law principles as a basis for finding an unfair insurance practice. Thus, the common-law principle of fiduciary duty could not provide the foundation for a CUIPA violation. C.G.S. §38a-816 specifically enumerates, in 22 subdivisions, those practices defined as unfair insurance practices. None identifies breach of fiduciary duty as an unfair insurance practice, or otherwise suggests that a breach of fiduciary duty can give rise to an unfair insurance practice. The trial court improperly incorporated the common-law concept into its CUIPA analysis. Absent the CUIPA violation, the plaintiff's CUTPA claim failed, consistent with the Supreme Court's 1986 decision in Mead v. Burns. A common-law breach of fiduciary duty arising in the insurance context that does not violate CUIPA or some other statute regulating the insurance industry cannot provide the basis for a valid CUTPA claim.