Welcome to our Supreme and Appellate Court summaries webpage. On this page, I provide abbreviated summaries of decisions from the Connecticut appellate courts which highlight important issues and developments in Connecticut law, and provide practical practice pointers to litigants. I have been summarizing these court decisions internally for our firm for more than 10 years, and providing relevant highlights to my municipal and insurance practice clients for almost as long. It was suggested that a wider audience might appreciate brief summaries of recent rulings that condense often long and confusing decisions down to their basic elements. These summaries are limited to the civil litigation decisions based on my own particular field of practice, so you will not find distillations of the many criminal and matrimonial law decisions on this page. I may from time to time add commentary, and may even criticize a decision’s reasoning. Such commentary is solely my opinion . . . and when mistakes of trial counsel are highlighted because they triggered a particular outcome, I will try to be mindful of the adage . . . “There but for the grace of God . . ..” I hope the reader finds these summaries helpful. – Edward P. McCreery
Posted February 10, 2014
This decision has general applicability to the right of the State to ensure an applicant for a license is of good moral standing. The majority concluded that the Connecticut Insurance Commissioner may consider factors beyond the mere licensing requirements of C.G.S. § 38a-702(a), et. seq, in considering whether to grant an insurance producer’s license. In this matter, the applicant wrote on his application, disclosing prior convictions for harassment and trespass (as required), and stated in his application that he went to work at his prior job solely to pay others, including “the shrink who would rather bust ... because I wrote . . . completely pathetic letters to women who would rather send me to prison than go out on a date . . . . . .[so] . . . I went to my last appointment and told the shrink in confidence that my $240 paid to him would be better spent hiring a whore to get me laid, and that his services were no longer needed . . ..” (Gee Willikers, - no wonder his application was denied! )
The Insurance Commissioner’s rejection letter discussed the confidences of clients that must be protected by an insurance agent, and expressed concern that the applicant’s past history and the language he used in the application called in to question his fitness to be an insurance agent. The Hearing Officer affirmed the Commissioner’s decision. On appeal, the Trial Court reversed in part, due to the Commissioner relying on C.G.S. §38a-769.
On further appeal, the Appellate Court took the opportunity to again review the law on when a statutory text is so clear that extra-textual sources of the meaning need not be pursued. A 2002 statutory amendment of C.G.S. § 38a-769 made clear that it no longer applied to insurance producers. Prior to the 2002 amendment, the law required that the Commissioner satisfied herself that the applicant was properly qualified, trustworthy, and that granting the license was in the public’s interest. The change deleted the trustworthy requirement. The change was supposed to be an effort to bring Connecticut into compliance with the Gramm-Leach-Bliley-Act and streamline the licensing of agents. Thus the trial court correctly concluded that 38a-769 no longer applied.
Despite this finding, the decision goes on to say that the Trial Court also correctly found the Commissioner (as well as most state licensing agencies) possessed discretionary powers beyond the statutory provisions of C.G.S. § 38a-702(a) to deny a license to an unworthy applicant. The provisions of C.G.S. § 46a-80 state that they shall prevail over all other provisions of the law which purport to govern denial of licenses on the grounds of lack of good moral character. Those provisions continue to apply to all matters, including insurance licenses, absent a specific exception in the applicable statute, and they are not inconsistent with the insurance licensing statute, 38a-702(a). Prior conviction of a crime may be the basis for the denial of any license, after taking into account the nature of the crime, the date of the crime and the intervening rehabilitation. Mandatory disclosure of prior criminal convictions in an insurance application reinforces the applicability of the general provisions of 46a-80 et seq.. It would be illogical for the Legislature to require disclosure of all criminal convictions, and yet require the Insurance Commissioner to turn a blind eye to what has been disclosed in the application. Since the Hearing Officer did not make his factual findings in the context of C.G.S. §§ 46a-80 and 81, the matter was remanded to the Hearing Officer to determine the appropriateness of the denial of the license with those statutes in mind.
Justice Bishop Dissented, holding that he would not apply § 46(a)-80 to insurance producers, arguing that the Statutes do not grant the Commissioner discretion to deny a license due to an applicant’s lack of good moral character, nor suspend a license upon grounds of conviction for a crime. [Oh, good grief. Can you imagine the chaos that could lead to? At least the Justice acknowledged that there appeared to be a void in the legislation, but he invites the Legislature to fix it.]
Delaware limited partnership agreement provided that each partner would receive their share of the estimated profits from an equity fund they were managing (“carried interest’) but that upon signing a separate giveback agreement…… which would be required of them….they would have to refund their share of any overpayment based upon the actual performance of the fund. The defendant refused to sign the giveback agreement stating his objections to the managers….nonetheless they kept paying him the advancements. At the end of the year he had been paid ~$900k and the company asked him to giveback $200k as the fund had not performed as expected. This decision upheld the judgment in favor of the defendant that he did not have to pay back the money. Though Delaware law does not require a partnership agreement to be signed in order to be enforceable, here that agreement specifically called for a “separate signed agreement” which would have been necessary to trigger the giveback obligations. The LP was also deemed to have waived its right to demand the giveback when it kept paying him, knowing that he refused to sign the giveback agreement and objected to it.
Well here is a lengthy opinion establishing a new rule to learn when pursuing appeals. After an extensive review of the history of advocacy, the Supremes have established a new rule for when a reviewing court may raise and decide an issue that the parties themselves had not raised. This may happen under either of these two scenarios (with only Part 2 being new): (1) when the issue implicates the court’s subject matter jurisdiction, or (2) when the reviewing court exercises its discretion to do so, which it may do if (a) exceptional circumstances exist that would justify review of such an issue, (b) the parties are given an opportunity to be heard on the issue, and (c) there is no unfair prejudice to the party against whom the issue is to be decided. It appears that Part 2 of the test in turn can be superseded by any number of extraordinary circumstances identified below, which the Court added was not an exhaustive list.
In this case the plaintiff had an agreement to refer Subway franchisees to the defendant as a preferred provider of insurance in return for a share of the commissions. The defendant could terminate the agreement to share commissions if the plaintiff lost its CT insurance license. The defendant did terminate the agreement when the plaintiff’s license was suspended …..but said suspension was arguably the defendant’s fault for not forwarding the plaintiff’s mail and that failure happened before the contract was ever executed.
The plaintiff sued but the defendant prevailed on summary judgment and the Appellate Court sustained….but upon grounds not raised below, nor in the appeal ……i.e……..that pre-contractual wrongful conduct of the defendant cannot as a matter of law, be asserted by the plaintiff in its breach of contract action against the defendant. Here, the plaintiff asserted that the defendant’s conduct prevented it from complying with the contract’s licensing requirement, excusing it from that contract requirement. The Supremes agreed that the Appellate Court got the law right on this issue. There can be no breach of the covenant of good faith and fair dealing until a contract is in place. But pre-fulfillment conduct may establish liability at times. For example, if a party unilaterally prevents the fulfillment of a condition precedent that would trigger contract performance obligations, liability may attach. But this authority does not apply when there is no contract at all yet in place.
The issue of pre-contract conduct being irrelevant however, had not been distinctly raised in the summary judgment proceedings below, nor in the appeal. The Supremes did not buy the plaintiff’s arguments that it was prejudiced by it being raised sua sponte by the Appellate Court…..but the Supremes did establish a new rule going forward that once a party makes even a colorable claim that had they known the new issue would be raised, they would have offered different evidence to the trial court below, then the burden will shift to the opponent to establish lack of prejudice.
The Court also suggested there may be other circumstances permitting review of unpreserved claims even if the elements of Part 2 of the test are not met. Examples would be when no one objects, it involves important public policy, it involves an intervening change in the law, there is judicial bias, there is plain error, or involves a constitutional issue, or etc.,……...but lack of prejudice alone is not enough and the reviewing court should make a specific statement why it is deviating from the normal rule and considering the unpreserved issue on appeal. When such a statement is issued, usually in the form of a request for supplemental briefing, it will then be the obligation of an objecting party to raise their objection. An abuse of discretion test will be applied to the reviewing court’s decision to consider an unpreserved claim
Next the Court had to address how a reviewing court may treat such an issue if it becomes pivotal to their decision. This begat yet another test. [Ugh!]
Treatment of such claims depends on three variables: (1) whether the claim was raised in the trial court; (2) whether the claim was raised on appeal; and (3)
whether the appellant would be entitled to a directed judgment if it prevailed on the claim that it raised on appeal, or whether, instead, there would be further proceedings in the trial court. An appellee for example is not entitled to review of an unpreserved claim that would grant a new trial. That would not end the litigation. They also said a reviewing court could not raise an appellee’s unpreserved (ruled upon) alternate ground for affirmance if that ruling was not challenged on appeal….but could raise it if not ruled upon below. [The variations seem endless and it appears the Court has opened up a can of worms with this one.]