Metsack et al v. Liberty Mutual Fire Insurance Company
ORDER (1) denying 59 Motion for Summary Judgment; and (2) granting 65 Motion for Summary Judgment. See attached for memorandum of decision. Signed by Judge Vanessa L. Bryant on 2/21/2017. (Hoffman, S)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
STEPHEN A. METSACK AND
GAIL D. METSACK,
LIBERTY MUTUAL FIRE INSURANCE
COMPANY AND ALLSTATE INSURANCE
CIVIL ACTION NO.
February 21, 2017
MEMORANDUM OF DECISION DENYING LIBERTY MUTUAL’S MOTION FOR
SUMMARY JUDGMENT [DKT. 59] AND GRANTING ALLSTATE’S MOTION FOR
SUMMARY JUDGMENT [DKT. 65]
This action arises out of an insurance dispute between the Plaintiffs,
Stephen A. Metsack and Gail D. Metsack (the “Metsacks”) and Defendants Liberty
Mutual Fire Insurance Company (“Liberty Mutual”), and Allstate Insurance
Company (“Allstate”). The Metsacks allege breach of contract, breach of the
implied covenant of good faith and fair dealing, and violations of the Connecticut
Unfair Insurance Practices Act (“CUIPA”) and Unfair Trade Practices Act
(“CUTPA”), stemming from Defendants’ decision to decline coverage for damage
to the basement walls of Plaintiffs’ home under their homeowners insurance
policies (the “Policies”). Liberty Mutual and Allstate separately have moved for
summary judgment with respect to these claims. For the reasons that follow,
Liberty Mutual’s Motion for Summary Judgment [Dkt. 59] is DENIED, and
Allstate’s Motion for Summary Judgment [Dkt. 65] is GRANTED.
The Metsacks have lived at 148 Laurel Lane, Ashford, Connecticut (“the
Property”) since 1992. [Dkt. 30 (“Compl.”) ¶¶ 5-6]. The Property was insured by
Allstate under separate policies of insurance, each with one-year terms,
beginning on June 27, 1991 and ending on September 9, 2009 [Compl. ¶ 55; Dkt.
67-9 (“P. Torres Aff.”) ¶ 3]. From September 2009 until the present, Plaintiffs have
been insured by Liberty Mutual. [Compl. ¶ 6]. Mr. Metsack acted as his own
general contractor when the house was originally constructed in 1992. [Dkt. 74-1
(S. Metsack Dep. at 13]. The concrete used to construct the basement walls of
the home was supplied by the JJ Mottes Company. [S. Metsack Dep. at 71; Dkt.
74-3 (“G. Metsack Dep.”) at 4-5].
In the years following the home’s construction, the Metsacks noticed what
they believed to be “minor cracking” in the basement walls. [S. Metsack Dep. at
75-76; G. Metsack Dep. at 19; Dkt. 74-4 at 10-11]. Stephen Metsack recalled first
noticing this cracking prior to 2008, but Gail Metsack did not recall observing
cracking prior to 2009. [S. Metsack Dep. at 47; G. Metsack Dep. at 11-12]. Despite
noticing minor cracking, the Metsacks perceived no problems with the basement
walls of their home until April of 2014, when a friend observed exterior cracking
and suggested that the Metsacks speak with a contractor about it. Id. This
contactor inspected the property and suggested for the first time that the cracks
might be associated with defective concrete. [S. Metsack Dep. at 78]. On April
15, 2014, the Metsacks noticed water infiltrating the basement for the first time
since the home was constructed, leading them to believe that their basement
walls were in fact affected by defective concrete. [S. Metsack Dep. at 84-87; G.
Metsack Dep. at 19; Dkt 74-4 at 10-11].
The Metsacks, Liberty Mutual, and Allstate each retained experts to
investigate the causes of the cracking in the Metsacks’ basement walls. All agree
that a chemical reaction involving the oxidation of iron sulfide materials in
defective concrete provided by the JJ Mottes Company caused the concrete to
expand and crack. The Metsacks’ expert, David Grandpré, P.E., opined in an
October 30, 2015 report that “the severity of deterioration of the concrete
basement walls compromised the[ir] structural integrity and will continue to
weaken until they are no longer competent to perform their intended function of
supporting the weight of the floors, walls, and roof.” [Dkt. 67-5, Exh. A at 4]. He
further stated that “the concrete walls can no longer be relied on to continue to
perform their intended function of resisting the lateral pressures exerted on them
by soil and water in the ground and for supporting the vertical loads of the woodframed house.” Id. Grandpré conceded that the house was “still safe to live in,”
but that because the basement walls cannot be counted on to continue to support
the weight of the rest of the house in the future, they were substantially impaired.
[Dkt. 74-6 (“Grandpré Dep.” at 50-51]. He also stated that the point of substantial
impairment is when horizontal cracks begin to appear in the concrete, which
typically occurs between ten and eighteen years after the concrete is poured.
[Grandpre Dep. at 54-55, 100-103].
A. Liberty Mutual Claim
On April 18, 2014, the Metsacks submitted a claim to Liberty Mutual, which
mentioned water infiltration, but did not inform Liberty that they had spoken to a
contractor about their basement walls or that the concrete in the basement walls
was supplied by JJ Mottes. [G. Metsack Dep. at 58-59]. On April 25, 2014, Liberty
Mutual sent an independent adjuster to inspect the Property. [Dkt. 61-8]. The
adjuster’s report noted cracks in all four basement walls, some as wide as a
quarter of an inch, and possible structural displacement. Id. As possible causes
of the damage, the adjuster listed “hydrostatic pressure, improper concrete mix,
[and] freeze thaw,” and she recommended consulting an engineer to determine
whether the damage was structural. Id. Liberty Mutual did not consult an
engineer, and by letter dated May 12, 2014, denied the Metsacks’ claim on the
grounds that the damage was caused by “settling/earth movement and ground
water intrusion.” [Dkt. 61-9].
The Liberty Mutual Policy provides coverage under Section 8 of the Policy
for “direct physical loss to covered property involving collapse of a building or
any part of a building caused only by one or more of the following . . . (b) Hidden
decay . . . or (f) Use of defective material or methods in construction, remodeling
or renovation.” [Dkt. 30-1 ¶ 8]. The Liberty Mutual Policy does not include a
definition for “collapse,” but excludes loss to a “foundation . . . unless the loss is
a direct result of the collapse of a building,” and excludes “settling, cracking,
shrinking, bulging or expansion.” Id.
The Metsacks identify numerous lawsuits against Liberty Mutual or its
affiliates that involve the denial of coverage for losses resulting from defective JJ
Mottes Company concrete. [See Dkt. 72 ¶¶ 23-26].1 They also submit five denial
of coverage letters from Liberty Mutual and related entities from the Liberty
Mutual Group. The letters date from September 2012 to August 2015, and blame
the basement wall cracking reported on “settling or earth movement” (August 11,
2015), “settling, expansion” (September 19, 2012), “long term moisture
infiltration” and “original construction methods” (April 21, 2015), “faulty
construction” (January 10, 2013), and “faulty workmanship or materials” (October
15, 2014). [Dkt. 72-9].
B. Allstate Claim
The Metsacks notified Allstate of the condition of their walls and submitted
an insurance claim on March 3, 2015. [Compl. ¶¶ 66; Dkt. 67-8 “Erskine Aff.” ¶¶ 4
They list Karas v. Liberty Ins. Corp., No. 3:13-cv-1836 (SRU) (D. Conn.); Belz v.
Peerless Ins. Co., No 3:13-cv-1315 (JCH) (D. Conn.); Roberts v. Liberty Mut. Fire
Ins. Co., No. 3:13-cv-435 (SRU) (D. Conn.); Matthews v. Peerless Ins. Co., No. 3:12cv-1506 (WWE) (D. Conn.); Waters v. Liberty Mutual Group, Inc., No. 06-131 (Mass.
Sup. Ct.)]; Celentano v. Liberty Mut. Fire Ins. Co., No. TTD-CV-15-6009018-S
(Conn. Sup. Ct.); Constantino v. Liberty Mut. Fire Ins. Co., No. TTD-CV-166010670-S (Conn. Sup. Ct.); Gabriel v. Liberty Mut. Fire Ins. Co., No. 3:14-CV01435 (SRU) (D. Conn.); Jang v. Liberty Mut. Fire Ins. Co., No. 3:15-CV-01243
(JBA) (D. Conn.); Mensher v. Liberty Mut. Fire Ins. Co., 3:15-CV-01007 (WWE) (D.
Conn.); Metsack v. Liberty Mut. Fire Ins. Co., No. 3:14-cv-01150 (VLB) (D. Conn.);
Roy v. Liberty Mut. Fire Ins. Co., No. TTD-CV-15-6009410-S (Conn. Sup. Ct.);
Wojtyna v. Liberty Mut. Fire Ins. Co., No. TTD-CV-16-6010342-S (Conn. Sup. Ct.);
Dino v. Safeco Ins. Co. of America, No. TTD-CV-16-6010428-S (Conn. Sup. Ct.);
Jenkins v. Liberty Ins. Corp., No. 3:16-cv-00090 (AVC) (D. Conn.); Kowalyshyn v.
Excelsior Ins. Co., No. 3:16-cv-00148 (JAM) (D. Conn.); Piacentini v. Kemper
Independence Ins. Co., No. TTD-CV-16-6010341-S (Conn. Sup. Ct.); Soderburg v.
Peerless Indemnity Ins. Co., No. TTD-CV-16- 6010893-S (Conn. Sup. Ct.);
Willenborg v. Unitrin Preferred Ins. Co., No. TTD-CV-16-6010936-S (Conn. Sup.
5]. Plaintiffs state that they had attempted to notify Allstate earlier by way of their
independent agent, who refused to submit the claim on their behalf. [G. Metsack
Dep. at 15-18]. The claim referenced the April 15, 2014 water intrusion and the
fact that while the Metsacks no longer had an active policy with Allstate, the loss
may have occurred during the time that Allstate covered the property. [G.
Metsack Dep. at 21-22, 25-26]. Allstate orally denied the claim on March 10, 2015,
and sent the Metsacks a letter dated March 27, 2015 memorializing the denial. [G.
Metsack Dep. at 26-27; Dkt. 74-5 ¶ 3].
The Metsacks were insured under two separate Allstate policies: one
covering the period between 1991 and 1994 (“First Allstate Policy”), and a second
covering the period between 1994 and 2009 (“Second Allstate Policy”)
(collectively, “Allstate Policies”). [Torres Aff., Exh. 1 at 4, Exh. 2 at 3; Exh. 3 at
15]. The Allstate Policies cover “the entire collapse of a covered building
structure” and the “entire collapse of part of a building structure,” so long as the
collapse is “a sudden and accidental direct physical loss caused by . . . hidden
decay of the building structure” or “defective methods or materials used in
construction, repair, remodeling or renovation.” [Dkt. 30-3 at 15]. The Allstate
Policy does not contain a specific definition for “collapse,” but defines “building
structure” as “a structure with walls and a roof.” Id. at 3. Like the Liberty Mutual
Policy, the Allstate Policies exclude “settling, cracking, shrinking, bulging or
The Metsacks also offer evidence that other than the claim advanced in the
instant lawsuit, Allstate has encountered and denied at least eight separate
claims for coverage with respect to homes constructed with concrete supplied by
the JJ Mottes Company. [Dkt. 74 ¶ 53].2 Plaintiffs offer two letters they claim
deny coverage on the ground that the insured failed to provide prompt notice
[Dkt. 74 ¶ 54].3 The denial letters state that the basement wall cracking was
examined by the structural engineer Leonard Morse-Fortier. Valls v. Allstate
Insurance Co., Dkt. 24-5, No. 3:16-cv-1310 (VAB) (“Valls Letter”); Carney v.
Allstate Insurance Co., Dkt. 30-2, No. 3:16-cv-592 (VLB) (“Carney Letter”). The
Valls Letter suggested that the loss “may not have occurred during the Allstate
policy term,” and stated that coverage would be denied on the grounds that the
cracking was not a “sudden and accidental direct physical loss,” and that the
cracking was not an “entire collapse” because the “house remains occupied, the
foundation walls appear plumb, there is very little visible damage to the walls
themselves, the walls support the house structure above, and the walls retain the
soil that surrounds the house.” Id. at 3-4. The Carney Letter similarly stated that
the cracking was not a “sudden and accidental direct physical loss,” adding that
Plaintiffs cite Carlson v. Allstate Ins. Co., No. 3:15-cv-1045 (MPS) (D. Conn.);
Lees v. Allstate Ins. Co., No. 3:15-cv-1050 (VAB) (D. Conn.); Carney v. Allstate Ins.
Co., No. 3:16-cv-592 (VLB) (D. Conn.); Lajeunesse v. Allstate Ins. Co., No. 3:16-cv937 (AVC) (D. Conn.); Manseau v. Allstate Ins. Co., No. 3:16-cv-1231 (MPS) (D.
Conn.); Valls v. Allstate Ins. Co., No. 3:16-cv-1310 (VAB) (D. Conn.); Pearse v.
Allstate Ins. Co., No. 3:16-cv-1337 (SRU) (D. Conn.); Adams v. Allstate Ins. Co.,
No. 3:16-cv-1337 (JBA) (D. Conn.)].
Plaintiff failed to submit these letters on the record, apparently accidentally.
[See Dkt. 74-5]. The letters are publicly available as part of the record in Valls v.
Allstate Insurance Co., Dkt. 24-5, No. 3:16-cv-1310 (VAB) and Carney v. Allstate
Insurance Co., Dkt. 30-2, No. 3:16-cv-592 (VLB). Defendants discussed the
content of these letters in their briefing, suggesting that they were unaware that
the letters were not filed on the docket in this case. Any objections to the Court
considering the versions of the letters docketed in Valls and Carney should be
raised within seven days of the date of this Order.
“Allstate does not know how long you have known about cracking in your
foundational concrete. However, the loss in question is one that has occurred
over time and may have been evident for an extended period.” Id. at 4.
Standard of Review
Summary judgment should be granted “if the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). The moving party bears the burden of
proving that no factual issues exist. Vivenzio v. City of Syracuse, 611 F.3d 98,
106 (2d Cir. 2010). “In determining whether that burden has been met, the court is
required to resolve all ambiguities and credit all factual inferences that could be
drawn in favor of the party against whom summary judgment is sought. Id.
(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Matsushita
Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). “If there is any
evidence in the record that could reasonably support a jury’s verdict for the
nonmoving party, summary judgment must be denied.” Am. Home Assurance
Co. v. Hapag Lloyd Container Linie, GmbH, 446 F.3d 313, 315-16 (2d Cir. 2006)
(quotation omitted). In addition, the court should not weigh evidence or assess
the credibility of witnesses” on a motion for summary judgment, as “these
determinations are within the sole province of the jury.” Hayes v. New York City
Dep’t of Corr., 84 F.3d 614, 619 (2d Cir. 1996).
“A party opposing summary judgment ‘cannot defeat the motion by relying
on the allegations in [her] pleading, or on conclusory statements, or on mere
assertions that affidavits supporting the motion are not credible.’ At the
summary judgment stage of the proceeding, [p]laintiffs are required to present
admissible evidence in support of their allegations; allegations alone, without
evidence to back them up, are not sufficient.” Welch-Rubin v. Sandals Corp., No.
3:03-cv-481, 2004 WL 2472280, at *1 (D. Conn. Oct. 20, 2004) (quoting Gottlieb v.
County of Orange, 84 F.3d 511, 518 (2d Cir.1996). “Summary judgment cannot be
defeated by the presentation . . . of but a ‘scintilla of evidence’ supporting [a]
claim.” Fincher v. Depository Trust & Clearing Corp., 604 F.3d 712, 726 (2d Cir.
2010) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986)).
A. Breach of Contract
Plaintiffs argue first that Liberty Mutual and Allstate are liable for breach of
contract, because they failed to cover losses as set forth in the Policies. An
insurance policy “is to be interpreted by the same general rules that govern the
construction of any written contract.” Zulick v. Patrons Mut. Ins. Co., 287 Conn.
367, 372–73 (2008). Any contract “must be construed to effectuate the intent of
the parties, which is determined from the language used and interpreted in the
light of the situation of the parties and the circumstances connected with the
transaction.” Murtha v. City of Hartford, 303 Conn. 1, 7–8 (2011) (quoting
Remillard v. Remillard, 297 Conn. 345, 355 (2010)); Harbour Pointe, LLC v.
Harbour Landing Condominium Ass’n, Inc., 300 Conn. 254, 260 (2011) (“In
ascertaining the contractual rights and obligations of the parties, we seek to
effectuate their intent, which is derived from the language employed in the
contract, taking into consideration the circumstances of the parties and the
transaction.” (quotations omitted)).
Where the language of a contract is unambiguous, a court “must give the
contract effect according to its terms.” Harbour Pointe, 300 Conn. at 260 (quoting
Cantonbury Heights Condominium Ass’n Inc. v. Local Land Dev., LLC, 273 Conn.
724, 734–35 (2005)). A contract is unambiguous when “its language is clear and
conveys a definite and precise intent . . . . The court will not torture words to
impart ambiguity where ordinary meaning leaves no room for ambiguity.” Id.
“[T]he mere fact that the parties advance different interpretations of the language
in question does not necessitate a conclusion that the language is ambiguous.”
Where the language of an insurance policy is ambiguous, such language
must be construed against the insurance company that drafted the policy. See
Springdale Donuts, Inc. v. Aetna Cas. & Sur. Co., 247 Conn. 801, 806 (1999).
However, any ambiguity in a contract “must emanate from the language used by
the parties” and “a contract is ambiguous if the intent of the parties is not clear
and certain from the language of the contract itself.” Murtha, 300 Conn. at 9.
“The contract must be viewed in its entirety, with each provision read in light of
the other provisions ... and every provision must be given effect if it is possible to
do so . . . . If the language of the contract is susceptible to more than one
reasonable interpretation, the contract is ambiguous.” Harbour Pointe, 300 Conn.
at 261 (quoting Cantonbury Heights, 273 Conn. at 735).
1. Liberty Mutual
Liberty Mutual raises three primary arguments in support of its position
that the damage to the Metsacks’ basement walls is not a covered loss. First,
Liberty Mutual argues that the damage to the Metsacks’ basement walls does not
constitute a collapse under the terms of the policy, because Liberty Mutual’s
“collapse” provision excludes coverage for loss to a foundation or retaining wall
unless the loss is a direct result of the collapse of the building. Second, Liberty
Mutual argues that Connecticut law has not provided sufficient guidance
regarding the meaning of “collapse” and asks the Court to certify that question to
the Connecticut Supreme Court before issuing its summary judgment ruling. As
a corollary, Liberty Mutual suggests that the damage to the Metsacks’ basement
walls is not extensive enough to constitute a “collapse” under the terms of the
Liberty Mutual Policy. Third, it argues that the claimed substantial impairment of
the Metsacks’ basement walls did not occur during a Liberty Mutual policy period.
The Court finds each of these arguments unpersuasive.
a. “Foundation” and “Retaining Wall” Exclusions
The facts presented in the instant case with respect to Liberty Mutual are
substantially equivalent to those presented in Belz v. Peerless Ins. Co., No. 3:13CV-01315 (VAB), 2016 WL 4599892 (D. Conn. Sept. 2, 2016), reconsideration
denied, 2016 WL 6542828 (D. Conn. Nov. 3, 2016). In Belz, the plaintiffs also
alleged breach of contract for failure to cover losses caused by deteriorating JJ
Mottes Company concrete. Id. at *2. The relevant policy provisions in the Belz
case are identical to the relevant provisions of the Metsaks’ Liberty Mutual policy.
Id. Additionally, the plaintiffs in both cases believed the cracks to be cosmetic
when they first appeared. Id. at *1. Finally, the same engineering expert
determined that the plaintiffs’ basement walls were substantially structurally
impaired, such that the walls would need to be replaced to prevent the home from
completely collapsing in the future. Id. at *2.
The similarities are not limited to the facts of each case, but also to the
defendants’ arguments. As in this case, Peerless argued that the terms
“foundation” and “retaining wall” are unambiguous and include basement walls,
justifying the denial of coverage for basement walls under an exclusion in the
“collapse” provision of the policy. Id. at *4. Liberty Mutual and Peerless raised
this argument at both the motion to dismiss and the summary judgment stages of
their respective cases, and as in Belz, this Court has already rejected their
argument at the motion to dismiss stage. See id. (rejecting the argument that
“foundation” and “retaining wall” are unambiguous, and stating that “the
ambiguity of the contract terms at issue in this case has already been determined
by this Court in a previous ruling on this matter”); Metsack v. Liberty Mut. Fire
Ins. Co., No. 3:14-CV-01150 (VLB), 2015 WL 5797016, at *7-8 (D. Conn. Sept. 30,
2015) (finding the terms “foundation” and “retaining wall” ambiguous, and
observing that “[t]he arguments raised by Liberty Mutual here have been
persuasively rejected three times by courts in this District”).
The law-of-the-case doctrine states that “when a court has ruled on an
issue, that decision should generally be adhered to by that court in subsequent
stages in the same case.” United States v. Carr, 557 F.3d 93, 102 (2d Cir. 2009).
Reconsideration of an earlier decision may be justified in “compelling
circumstances, consisting principally of (1) an intervening change in controlling
law, (2) new evidence, or (3) the need to correct a clear error of law or to prevent
manifest injustice.” Id. None of these conditions is present here. As at the
motion to dismiss stage, this Court noted that other courts in this District had
found “foundation” and “retaining wall” ambiguous. Metsack, 2015 WL 579016 ,
at *7-8. Since then, more decisions within this District have reaffirmed this
position. See, e.g., Belz, 2016 WL 4599892, at *4; Gabriel v. Liberty Mut. Fire Ins.
Co., No. 3:14-CV-01435-VAB, 2015 WL 5684063, at *4 (D. Conn. Sept. 28, 2015).
Liberty Mutual has similarly failed to present any new evidence that would
compel a new interpretation or that the Court’s prior decision was clear error.
Because this Court must rely on its prior ruling to guide its analysis on summary
judgment, the Court again holds that the terms “foundation” and “retaining wall,”
are ambiguous as used in the policy, and must be construed against Liberty
b. The Definition of Collapse
Like Peerless, Liberty Mutual believes that the definition of “collapse” set
forth in Beach v. Middlesex Mut. Assur. Co., 205 Conn. 246, 253, 532 A.2d 1297
(1987)—a “substantial impairment to structural integrity”—is itself insufficiently
defined, and asks the Court to certify a question to the Connecticut Supreme
Court to resolve the resulting ambiguity. [Dkt. 60 at 23]. Liberty Mutual further
argues that Connecticut should define “substantial impairment” so that it is
consistent with the definition set forth in Queen Ann Park Homeowners Ass’n v.
State Farm Fire and Cas. Co., 352 P.3d 790, 791 (Wash. 2015). In Belz, the court
rejected this argument, stating unequivocally that, “The Court finds no reason to
adopt Washington state law when the standard in Connecticut is relatively clear,
nor is there a need for certifying this issue to the Connecticut Supreme Court.”
Belz, 2016 WL 4599892, at *5. This Court sees no reason to deviate from this
In Queen Ann, the Washington Supreme Court held that a “collapse” in the
insurance context was a “substantial impairment to the structural integrity of a
building or part of a building that renders such building or part of a building unfit
for its function or unsafe.” Id. And it stated that the “substantial impairment”
must be “so severe as to materially impair a building’s ability to remain upright.”
Id. at 794. By contrast, Beach held that a collapse could occur “even though no
actual caving-in occurred and the structure was not rendered completely
uninhabitable.” This conflicts with Liberty Mutual’s argument that a “collapse”
should render a building “unfit for its function or unsafe.” [Dkt. 60 at 23 (quoting
Queen Ann, 352 P.3d at 791)].
Further, Beach supports finding certification inappropriate, because it
treats the question of whether a house was “substantially impaired” as one of
fact, not one of law. See Beach, 205 Conn. at 253 (stating that “the trial referee
found, as a matter of fact, that the plaintiffs had proven such impairment of their
house” (emphasis added)). Consistent with this interpretation, the Belz court
held that because the plaintiffs presented evidence that the cracks in their
basement walls “compromised the structural integrity of their home,” “there is a
material dispute as to whether the damage amounts to a ‘collapse’ under the
Peerless policy.’” Belz, 2016 WL 4599892, at *5. The same is true in this case—
the Metsacks have offered evidence that the damage to their basement walls
compromises the structural integrity of their home, and a material dispute exists
regarding whether this damage is sufficiently “substantial” to constitute a
“collapse” under the Liberty Mutual Policy’s terms.
Liberty Mutual also asked the Court to certify “whether the undefined
policy terms ‘foundation’ and ‘retaining walls’ are ambiguous” and “Whether a
basement or crawlspace is part of the ‘building.’” [Dkt. 60 at 24]. Given the
weight of case law in this District holding that “foundation” and “retaining walls”
are ambiguous, see Section IV.A.1.a., supra, and the fact that Liberty Mutual
offered no real argument regarding why it believes a crawlspace or basement is
not part of a “building,” the Court similarly declines to certify these questions of
fact to the Connecticut Supreme Court.
Grandpré has acted as an engineering expert in several cases about
defective JJ Mottes Company concrete. In connection with two of these other
cases, Grandpré calculated that substantial impairment to a home built in 1992
would occur somewhere between 2002 and 2006. [Dkt. 60 at 21; Grandpré Dep. at
100-103]. Citing this testimony, Liberty Mutual concludes that summary judgment
is warranted, because the Metsacks’ home was not insured by Liberty Mutual
until 2009. However, Grandpré also testified that substantial impairment occurs
when horizontal cracks appear in the basement walls, and Ms. Metsack testified
that she did not notice cracks until 2009. [Grandpré Dep. at 54-55; G. Metsack
Dep. at 11-12]. Viewed in the light most favorable to the Plaintiffs, a material
issue of fact exists as to whether a covered collapse occurred before or during
the period covered by the Liberty Mutual Policy.
Like Liberty Mutual, Allstate argues that “substantial impairment of
structural integrity” should be defined as occurring where a structure is (1) “unfit
for its function or unsafe”; or (2) “the structure is in imminent danger of falling
down.” [Dkt. 66 at 18]. As set forth in Section IV.A.1.b., supra, the “unfit for its
function or unsafe” standard is taken from a Washington case that is inconsistent
with Beach’s holding that a home need not be “completely uninhabitable” to have
“collapsed.” While the “imminent danger of falling down” language is taken
directly from Beach, is not a part of the case’s holding, and was not held to be a
prerequisite for a “collapse.” In context, the relevant section reads:
The [trial] court articulated its reasons as follows: ‘It [the referee’s report]
was accepted because we found it to be sound, comprehensive and logical
both factually and legally, including the recommendations: (i) that a
‘collapse’ in the sense of a material impairment of the basic structure of a
building was included within the coverage of the insurance policy involved
in this action; and (ii) that the structure in question was in imminent danger
of falling over, both of which are adopted by the undersigned.’”
Beach, 205 Conn. at 249. The “imminent danger of falling down” language is
quoted from the trial court’s decision, and does not represent the Connecticut
Supreme Court’s own definition of “collapse.” Id. Moreover, Beach states that
the trial court’s recommendations are logical “both factually and legally,”
suggesting that its conclusion about the structure’s condition was factual, rather
than legal. The court reinforces this suggestion later in its decision, when it
states, “Having determined that the trial court was correct in its conclusion that
[“collapse”] includes a substantial impairment of the structural integrity of a
building, we need only note that the trial referee found, as a matter of fact, that
the plaintiffs had proven such impairment of their house.” Beach v. Middlesex
Mut. Assur. Co., 205 Conn. 246, 253 (1987) (emphasis added). Because the
question of whether damage to a home constitutes a “substantial impairment of
the structural integrity of a building” is factual under Connecticut law, this Court
cannot grant summary judgment.
Unlike Liberty Mutual, however, the “collapse” provision of the Allstate
Policy requires that a covered collapse be “a sudden and accidental direct
physical loss.” [Dkt. 30-3 at 15]. While Beach and the numerous JJ Mottes
concrete cases that have been heard in this district have held that a collapse
need not be “sudden” to be covered, none of the policies evaluated included the
word “sudden” within their “collapse” provisions. See, e.g., Belz, 2016 WL
4599892, at *2; Karas, 33 F. Supp. 3d at 114; Bacewicz v. NGM Ins. Co., No. 3:08CV-1530 (JCH), 2010 WL 3023882, at *3 (D. Conn. Aug. 2, 2010); Beach, 205 Conn.
246, 251 (1987) (“Although ‘collapse’ encompasses a catastrophic breakdown, as
the defendant argues, it also includes a breakdown or loss of structural strength,
as the plaintiffs maintain. If the defendant wished to rely on a single facial
meaning of the term ‘collapse’ as used in its policy, it had the opportunity
expressly to define the term to provide for the limited usage it now claims to have
Plaintiff cites Dalton v. Harleysville Worcester Mut. Ins. Co., 557 F.3d 88, 92
(2d Cir. 2009) and Kelly v. Balboa Ins. Co., 897 F. Supp. 2d 1262 (M.D. Fla. 2012)
for the proposition that “sudden” in their policy is ambiguous, as each of these
cases held that where collapse was caused by “hidden decay” or “hidden insect
infestation,” it could not occur suddenly. However, the policy language at issue
in Dalton did not qualify “collapse” with “sudden.” Dalton, 557 F.3d at 90. While
the collapse provision at issue Kelly is very similar to the collapse provision in
the Allstate Policy, this Court does not agree that “the inclusion of [the term]
‘sudden’ in the definition of LOSS for a policy that covers insect damage creates
an ambiguous policy provision,” Kelly, 897 F. Supp. 2d at 1268. “Hidden decay”
and “hidden damage to the building structure caused by insects or vermin” can
cause a collapse that an insured would perceive as “sudden,” if the decay or
infestation were truly hidden from the insured’s view.
Because the parties do not dispute that the Metsacks’ basement walls
deteriorated over time, rather than “suddenly,” and that the effects of the
condition which has compromised the structure was observable to the
homeowners many years before the basement walls were opined to be
substantially impaired, the Allstate Policy excludes coverage for their loss
irrespective of the definition of the term “collapse.” Summary judgment on the
Breach of Contract claim with respect to Allstate is therefore GRANTED. Because
the Court finds that no material issue of fact precludes summary judgment that
the Allstate Policy did not cover the Metsacks’ claimed loss, summary judgment
on their bad faith and CUIPA/CUTPA claims with respect to Allstate must also be
B. Breach of Covenant of Good Faith and Fair Dealing
Plaintiffs argue that in denying coverage for their claim, Liberty Mutual
breached the implied covenant of good faith and fair dealing. The duty of good
faith and fair dealing “is a covenant implied into a contract or a contractual
relationship,” and every contract “carries an implied duty requiring that neither
party do anything that will injure the right of the other to receive the benefits of
the agreement . . . .” Renaissance Mgmt. Co., Inc. v. Conn. Hous. Fin. Auth., 281
Conn. 227, 240 (Conn. 2007) (quoting De La Concha of Hartford, Inc. v. Aetna Life
Ins. Co., 269 Conn. 424, 432–33 (Conn. 2004)). “To constitute a breach of [the
implied covenant of good faith and fair dealing], the acts by which a defendant
allegedly impedes the plaintiff’s right to receive benefits that he or she
reasonably expected to receive under the contract must have been taken in bad
faith.” Id.; accord Capstone Bldg. Corp. v. Am. Motorists Ins. Co., 308 Conn. 760,
795 (2013). “Bad faith in general implies both actual or constructive fraud, or a
design to mislead or deceive another, or a neglect or refusal to fulfill some duty
or some contractual obligation, not prompted by an honest mistake as to one’s
rights or duties, but by some interested or sinister motive . . . [b]ad faith means
more than mere negligence; it involves a dishonest purpose.” De La Concha, 269
Conn. at 433; accord Capstone Bldg. Corp., 308 Conn. at 795; TD Bank, N.A. v.. J
& M Holdings, LLC, 143 Conn. App. 340, 348 (Conn. App. Ct. 2013).
In the context of an insurance policy, “[a] bad faith action must allege
denial of the receipt of an express benefit under the policy.” Capstone Bldg.
Corp., 308 Conn. at 794. Any cause of action for bad faith “not tied to duties
under the insurance policy must therefore fail as a matter of law.” Id. at 797.
Because Plaintiffs have raised a material dispute regarding whether an express
benefit exists under the Liberty Mutual Policy, the question becomes whether the
record supports finding that Liberty Mutual acted with “actual or constructive
fraud,” a “design to mislead,” or have acted with “neglect or refusal to fulfill” its
duties. See De La Concha, 269 Conn. at 433.
In support of their claims, Plaintiffs argue that Liberty Mutual intentionally
relied on inapplicable policy provisions to deny their claims, despite their
knowledge that the damage may have been covered under the policy as a
“collapse.” The Metsacks offer evidence that before they submitted their claim,
Liberty Mutual had been a party to five separate lawsuits involving the same type
of damage and the same policy language. While none of these cases reached
resolution following a full trial on the merits, several decisions on motions to
dismiss had held that crumbling concrete basement walls could be covered as
There is also evidence that Liberty Mutual may have exercised bad faith in
the investigation of the Metsacks’ claim. Although Liberty Mutual’s independent
adjuster identified “hydrostatic pressure,” “freeze thaw,” and “improper concrete
mix” as causes of the cracking, [Dkt. 61-8], Liberty Mutual denied the Metsacks’
claim as resulting from “settling/earth movement” and “ground water intrusion.”
[Dkt. 61-9]. It is reasonable to conclude that “ground water intrusion” could be at
the root of damage caused by “freeze thaw” or “hydrostatic pressure.” However,
the adjuster’s report lacks any reference to settling/earth movement, and the
denial letter does not offer any basis for this conclusion other than a general
claim that “a careful investigation” was conducted. Id. Moreover, a reasonable
juror could conclude that Liberty Mutual acted in bad faith by failing to consult an
engineer as recommended by its independent adjuster, especially knowing that
the adjuster identified “improper concrete mix” as a possible cause of the
structural impairment. Viewed in the light most favorable to the Plaintiffs, these
facts raise material issues of fact with respect to the Plaintiffs’ bad faith claim.
C. CUIPA and CUTPA Claims
CUIPA does not provide a private right of action, but the Connecticut
Supreme Court has recognized “the existence of a private cause of action under
CUTPA to enforce alleged CUIPA violations.” Mead v. Burns, 199 Conn. 651, 663,
509 A.2d 11 (Conn. 1986). However, “conduct by an insurance broker or
insurance company that is related to the business of providing insurance can
violate CUTPA only if it violates CUIPA,” because “the legislative determinations
as to unfair insurance practices embodied in CUIPA are the exclusive and
comprehensive source of public policy in this area.” State v. Acordia, Inc., 310
Conn. 1, 9-12, 73 A.3d 711 (Conn. 2013).
Section 38a–816 of CUIPA proscribes “unfair methods of competition and
unfair and deceptive acts or practices in the business of insurance,” including
“unfair claim settlement practices.” Conn. Gen. Stat. § 38a–816. Plaintiffs claim
that the Defendants violated these unfair claim settlement practices provisions.
See Conn. Gen.Stat. § 38a–816(6)(C) (failure “to adopt and implement reasonable
standards for the prompt investigation of claims arising under insurance
policies”); Conn. Gen. Stat. § 38a–816(6)(D) (refusal “to pay claims without
conducting a reasonable investigation based upon all available information”).
Unfair claim settlement practices constitute a CUIPA violation when they are
“[c]ommitt[ed] or perform[ed] with such frequency as to indicate a general
business practice.” Conn. Gen. Stat. § 38a–816(6).
In addition to offering evidence that Liberty Mutual did not sufficiently
investigate their claim, Plaintiffs have offered evidence that Liberty Mutual and its
affiliates have been involved in 19 separate lawsuits (including the instant case)
involving the denial of claims arising from defective JJ Mottes concrete.
Although most of these lawsuits post-date the Metsacks’ claim, their existence,
along with Plaintiffs’ submission of five claim denial letters that deny coverage
for homeowners experiencing the same damage under the same claim language,
is sufficient to preclude summary judgment on this issue. See Belz, 2016 WL
4599892, at *9 (holding the defendant’s refusal to cover similar claims in “three
separate matters” could show that the defendant “has a general business
practice of unfairly settling disputes” on summary judgment, where the defendant
offered no alternative explanation for the proliferation of lawsuits).
The Court recognizes that the insurance policy language is ambiguous and
that an insurer does not violate CUIPA by asserting a reasonable interpretation of
its policy language. See McCulloch v. Hartford Life & Acc. Ins. Co., 363 F. Supp.
2d 169, 177 (D. Conn. 2005). However, Liberty Mutual’s refusal to hire an engineer
as its independent adjuster recommended and its reliance on reasons for its
denial of coverage which were unsupported by its adjuster’s report are sufficient
to overcome summary judgment on this issue.
For the foregoing reasons, Liberty Mutual’s Motion for Summary Judgment
is DENIED, and Allstate’s Motion for Summary Judgment is GRANTED.
IT IS SO ORDERED.
Hon. Vanessa L. Bryant
United States District Judge
Dated at Hartford, Connecticut: February 21, 2017
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