Bertelson v. Union Mutual Fire Insurance Co., No. 834-04 Cncv (Norton, J., Nov. 22, 2004)

[The text of this Vermont trial court opinion is unofficial. It has been reformatted from
the original. The accuracy of the text and the accompanying data included in the Vermont
trial court opinion database is not guaranteed.]


STATE OF VERMONT
Chittenden County, ss.:



JOEL R. BERTELSON and DANIEL MENDL

v.

UNION MUTUAL FIRE INSURANCE CO. and
NEW ENGLAND GUARANTY INSURANCE COMPANY




                                            ENTRY
        The plaintiffs, Joel Bertelson and Daniel Mendl, seek damages from their insurer, Union
Mutual Fire Insurance Company, for losses related to fire damage to their home, which was
covered under an insurance policy with Union Mutual. The plaintiffs move to amend their
complaint to add a consumer fraud claim under 9 V.S.A. §§ 2451–2463. Union Mutual argues
that the Vermont Consumer Fraud Act does not apply to insurance. For the following reasons,
the court grants the plaintiffs’ motion.
        Whether the Consumer Fraud Act applies to insurance is an unsettled question in
Vermont. Although the Supreme Court held in 1981 that the Act did not apply to insurance, see
Wilder v. Aetna Life & Cas. Ins. Co., 140 Vt. 16, 18–19 (1981), subsequent amendments to the
Act in 1985 have created disagreement among lower courts as to whether Wilder is still good
law. Compare Greene v. Stevens Gas Serv., 2004 VT 67, ¶ 10 (acknowledging lower court
holding that Act does not apply to insurance but declining to reach issue) with Fish v. Allstate
Ins. Co., No. S0056-03 CnCv (June 11, 2003) (order denying motion to dismiss) (Katz, J.)
(holding that Wilder no longer dispositive and that Act applies to insurance).
       Prior to 1985, the statute defined applicable goods and services in consumer fraud actions
separately. The statute defined goods as “tangible personal chattel” and services as “work, labor
and services . . . in connection with the delivery, installation, servicing, repair or improvement of
goods.” 1973, No. 221 (Adj. Sess.), § 3. As amended, the statute now defines goods and services
together as “any objects, wares, goods, commodities, work, labor, intangibles, courses of
instruction or training, securities, bonds, debentures, stocks, real estate, or other property or
services of any kind.” 9 V.S.A. § 2451a. Obviously, this new definition has expanded the Act’s
scope. Hence, Supreme Court interpretation of the prior definitions is no longer dispositive.
        The Supreme Court has repeatedly held that the Act’s broad remedial purpose requires
courts to construe its terms liberally in order to protect consumers. See Elkins v. Microsoft
Corp., 174 Vt. 328, 331 (2002). With a liberal construction, the terms of the current statute reach
insurance transactions. For instance, the term “intangible” suggests that goods or services include
incorporeal assets like insurance policies. See Black’s Law Dictionary 823 (8th ed. 2004)
(defining intangible as “[s]omething that lacks a physical form; an abstraction, such as
responsibility; esp., an asset that is not corporeal, such as intellectual property”). Furthermore,
the statute’s catchall phrase “other property or services of any kind” also indicates that insurance
policies are covered by the statute either as a form of property, see Dodd v. Commercial Union
Ins. Co., 365 N.E.2d 802, 807 (Mass. 1977) (“Insurance policies are contracts in which the
insurer promises to pay money to the insured or to third parties on the happening of a specified
event. This contractual right to payment is a recognized property right.”), or as a form of a
service, see Stevens v. Motorists Mut. Ins. Co., 759 S.W.2d 819, 821 (Ky. 1988) (“An insurance
policy is nothing more and nothing less than a contract providing for delivery of financial
services as specified in the policy when loss occurs as described in the policy. As such it is in the
same class as other financial services.”). Either way, the statue covers insurance.
         Moreover, in construing a statute, courts consider the whole of the statute and every part
of it. Sagar v. Warren Selectboard, 170 Vt. 167, 171 (1999). Another definition within § 2451a
expressly exempts insurance from transactions involving “home solicitation sales” of goods or
services. See 9 V.S.A. § 2451a(d)(5). If the legislature did not intend § 2451a(b) to include
insurance, it would not have made the effort to exempt insurance from home solicitation sales of
goods or services.
        Furthermore, numerous other state courts, in addition to the two cited above, have applied
similarly worded consumer fraud statutes to insurance transactions. See, e.g., Showpiece Homes
Corp. v. Assurance Co. of Am., 38 P.3d 47, 54–55 (Colo. 2001) (en banc) (holding that Colorado
consumer protection statute applies to insurance and reviewing numerous other state decisions);
Lemelledo v. Beneficial Management Corp. of Am., 696 A.2d 546, 551 (N.J. 1997) (holding that
New Jersey consumer fraud statute applies to insurance in conjunction with loans). This court
sees no reason to deviate from what appears to be the majority rule.
        Courts allow amendments to pleadings at this stage “freely . . . when justice so requires.”
V.R.C.P. 15(a); see also Bevins v. King, 143 Vt. 252, 254–55 (1983) (holding that denial of
motion to amend is abuse of discretion where “there is no prejudice to the objecting party, and
when the proposed amendment is not obviously frivolous nor made as a dilatory maneuver in
bad faith”). Given that the Act applies to insurance, the plaintiffs’ request to amend is not
frivolous and does not unfairly prejudice Union Mutual in this action. Hence, the court grants
their motion.

                                             ORDER
    For the foregoing reasons, the plaintiffs’ motion to amend their complaint is
GRANTED.


       Dated at Burlington, Vermont, November 22, 2004.



                                                                ____________/s/____________
                                                                    Richard W. Norton Judge




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