Stratton Faxon v. National Mutual

Citation: ''Stratton Faxon v. National Mutual Ins. Co.,'' 2006 WL 2092625 (D. Conn. July 26, 2006).

Factual Background
The New Haven, Connecticut firm of Stratton Faxon contracted with Office Line to service its copy machine in which a computer keeps track of how many copies are made for each client. During one service call Office Line accidentally erased that computerized information.

Stratton Faxon settled its claim with Office Link for $50,000, but did not get paid because Office Link’s insurer, National Mutual Insurance Co., said its policy did not cover damage to intangible property, and computer data is intangible.

Stratton Faxon, representing itself, sued the insurer for “breach of the insurance contract, breach of the covenant or [sic] good faith and fair dealing; and a violation of Connecticut’s Unfair Trade Practices Act.”

Court Decision
Defendant moved to dismiss, to sever the claims, and for a stay of the action. The court denied the motions without prejudice to renewal. The judge ruled, however, that the facts alleged were not sufficient to state a valid claim, and gave plaintiff a short period of time to amend its complaint

Among the reasons the court, in effect, granted the motion to dismiss were:


 * Previous Connecticut cases had held that the improper handling of a single insurance claim without showing that the insurer had mishandled other claims was insufficient to create liability under the unfair practices act.


 * Plaintiff claimed that defendant had inadequately investigated the claim, denied Office Link a defense, and that defendant’s conduct represented its general practice regarding similar claims. “Notably, however, Stratton Faxon has not made any such allegations in its Complaint. . . . [T]he best course of action at the moment is to allow [plaintiff] to amend its Complaint.”