Bertelson v. Union Mutual Fire Insurance Co., No. 8 34-04 Cncv 

### (Norton, J., Nov. 22, 2004)

[The text of this Vermont trial court opinion is un official. It has been reformatted from the original. The accuracy of the text and the acco mpanying 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, s eek damages from their insurer, Union Mutual Fire Insurance Company, for losses related t o 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 insuranc e is an unsettled question in Vermont. Although the Supreme Court held in 1981 th at the Act did not apply to insurance, see
Wilder v. Aetna Life & Cas. Ins. Co. , 140 Vt. 16, 18–19 (1981), subsequent amendments t o the Act in 1985 have created disagreement among lower c ourts 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 de clining 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 insu rance).

Prior to 1985, the statute defined applicable good s and services in consumer fraud actionsseparately. 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, debentu res, 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 p rior 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 construct ion, the terms of the current statute reach insurance transactions. For instance, the term “int angible” suggests that goods or services include incorporeal assets like insurance policies. See Bla ck’s Law Dictionary 823 (8th ed. 2004) (defining intangible as “[s]omething that lacks a p hysical form; an abstraction, such as responsibility; esp., an asset that is not corporea l, such as intellectual property”). Furthermore, the statute’s catchall phrase “other property or se rvices of any kind” also indicates that insurance policies are covered by the statute either as a for m of property, see Dodd v. Commercial Union
Ins. Co. , 365 N.E.2d 802, 807 (Mass. 1977) (“Insurance poli cies 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 recog nized 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 cont ract providing for delivery of financial services as specified in the policy when loss occur s as described in the policy. As such it is in the same class as other financial services.”). Either w ay, 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 withi n § 2451a expressly exempts insurance from transactions invol ving “home solicitation sales” of goods or services. See 9 V.S.A. § 2451a(d)(5). If the legisl ature did not intend § 2451a(b) to include insurance, it would not have made the effort to exe mpt insurance from home solicitation sales of goods or services.

Furthermore, numerous other state courts, in addit ion to the two cited above, have applied similarly worded consumer fraud statutes to insuran ce 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 an d 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 insura nce in conjunction with loans). This court

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sees no reason to deviate from what appears to be t he 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 o f
motion to amend is abuse of discretion where “there is no prejudice to the objecting party, and when the proposed amendment is not obviously frivol ous nor made as a dilatory maneuver in bad faith”). Given that the Act applies to insuranc e, the plaintiffs’ request to amend is not frivolous and does not unfairly prejudice Union Mut ual 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