Thurston Foods, Inc. v. Wausau Business Insurance Company
ORDER granting 137 Motion for Reconsideration ; granting 138 Motion for Reconsideration. Signed by Judge Warren W. Eginton on 10/20/2017. (Gould, K.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
THURSTON FOODS, INC.,
WAUSAU BUSINESS INSURANCE
RULING ON CROSS MOTIONS FOR RECONSIDERATION
In this action, plaintiff Thurston Foods, Inc., seeks to recover benefits under a
commercial property insurance policy issued by defendant Wausau Business Insurance
Company. Plaintiff has alleged claims for breach of contract, bad faith, and violation of
the Connecticut Unfair Insurance Practices Act (“CUIPA”) and the Connecticut Unfair
Trade Practices Act (“CUTPA”).
In a ruling dated May 17, 2017, the Court granted in part and denied in part
defendant’s motion for summary judgment; it denied plaintiff’s motion for partial
summary judgment. Specifically, the Court granted defendant’s motion for summary
judgment relevant to the exclusion for spider cracking damage; however, the Court
provided that a jury could still consider whether the cracking exception applies as it
remains a question of fact whether the heaving damage was “caused by or resulted
from” the cracking. The Court also ruled that the jury should consider whether freezing
within the ventilation system caused the floor damage, and if so, whether that damage
falls within the “Earth Movement” exclusion. Plaintiff requests clarification or
reconsideration of the Court’s ruling relevant to the cracking exclusion. Defendant
seeks reconsideration of the Court’s ruling regarding (1) failure to disregard the Piho
affidavit; (2) failure to find that there is no coverage for snow removal under the Policy;
(3) failure to find that there is no coverage for non-damaged matching ceiling tiles
included in Thurston’s claim submission; (4) denial of summary judgment on the bad
faith claims; and (5) misreading of the exclusions relevant to earth movement and
cracking. For the following reasons, the Court will grant the motions for reconsideration
and will clarify its prior ruling.
A motion for reconsideration "generally will be denied unless the moving party
can point to controlling decisions or data . . . that might reasonably be expected to alter
the conclusion reached by the court." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257
(2d Cir. 1995). "The major grounds justifying reconsideration are 'an intervening
change of controlling law, the availability of new evidence, or the need to correct a clear
error or prevent manifest injustice.'" Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956
F.2d 1245, 1255 (2d Cir. 1992).
Insurance contracts are to be interpreted according to the same rules that govern
the construction of written contracts. Great Lakes Reinsurance (UK), PLC v. JDCA,
LLC, 2014 WL 6633039, at *8 (D. Conn. Nov. 21, 2014). Insurance policy words must
be accorded their ordinary and natural meaning, and any ambiguity in the terms of the
policy must be construed in favor of the insured. Hansen v. Ohio Casualty Ins. Co.,
239 Conn. 537, 542 (1996). "The determinative question is the intent of the parties," as
disclosed by the policy terms viewed in their entirety. Community Action for Greater
Middlesex County, Inc. v. American Alliance Insurance Co., 254 Conn. 387, 399 (2000).
The court must “look at the contract as a whole, consider all relevant portions together
and, if possible, give operative effect to every provision in order to reach a reasonable
overall result.” O’Brien v. U.S. Fid. & Guar. Co., 235 Conn. 837, 843 (1996).
In interpreting contract terms, the Court must afford the language used "its
common, natural and ordinary meaning and usage where it can be sensibly applied to
the subject matter of the contract." Wolosoff v. Wolosoff, 91 Conn. App. 374, 381
(2005). Where the language of the contract is clear and unambiguous, the contract
should be given effect according to its terms. Breiter v. Breiter, 80 Conn. App. 332,
336 (2003). A contract is unambiguous when its language is clear and conveys a
definite and precise intent. Cantonbury Heights Condominium, Inc. v. Local Land Dev.
LLC, 273 Conn. 724, 735 (2005). "A contract term not expressly included will not be
read into a contract unless it arises by necessary implication from the provisions of the
instrument. . . ." Heyman v. CBS, Inc., 178 Conn. 215, 227 (1979). "A court will not
torture words to import ambiguity where the ordinary meaning leaves no room for
ambiguity and words do not become ambiguous simply because lawyers or laymen
contend for different meanings." Barnard v. Barnard, 214 Conn. 99, 110 (1990).
Ambiguity "must emanate from the language used" by the parties. United
Illuminating Co. v. Wisvest-Connecticut, LLC, 259 Conn. 665, 671 (D. Conn. 2002). If
the language of the contract is susceptible to more than one reasonable interpretation,
the contract is ambiguous. Lopinto v. Haines, 185 Conn. 527, 538 (1981). The
question of whether a contractual provision is ambiguous presents a question of law.
LMK Enterprises, Inc. v. Sun Oil Co., 86 Conn. App. 302, 306 (2004). Where a
contract term is found to be ambiguous, the court may properly discern the intent of the
contract through consideration of extrinsic evidence. See United Illuminating Co., 259
Conn. at 675.
Earth Movement and Cracking Exclusions
Subsection 1.b of “Exclusions” addresses earth movement and provides:
We will not pay for loss or damage caused directly or indirectly by any of the
following. Such loss or damage is excluded regardless of any other cause or
event that contributes concurrently or in any sequence to the loss…..(b)(4)
Earth sinking (other than sinkhole collapse) rising or shifting including soil
conditions which cause settling, cracking or other disarrangement of
foundations or other parts of realty. Soil conditions include contraction,
expansion, freezing, thawing, erosion, improperly compacted soil and the
action of water under the ground surface.
Section 2.d.(4) of “Exclusions” sets forth that defendant “will not pay for loss or damage
caused by or resulting from … settling, cracking, shrinking or expansion….”
Subsection 2 of the Exclusions concludes with the following language: “But if an
excluded cause of loss that is listed in 2.d.(1) through (7) results in a ‘specified cause of
loss’ or building glass breakage, we will pay for the loss or damage caused by that
‘specified cause of loss’ or building glass breakage.”
Plaintiff points out that Section 2.d.(4) lacks the anti-concurrent language
contained within Section 1 relevant to the earth movement exclusion. There is no
indication that the anti-concurrent language of Section 1 applies to the cracking
exclusion of Section 2.d.(4). Further, the concluding language of Section 2
contemplates coverage of an excluded loss enumerated in subsections d.(1)-(4), such
as cracking, when caused by a “specified cause of loss.” Prior court decisions have
held that analogous language may be reasonably interpreted to mean that an exclusion
does not apply to a loss that was caused by a loss not otherwise excluded. See
Sentinel Assocs. v. American Mfr. Mut. Ins. Co., 804 F. Supp. 815, 820 (E.D. Va. 1992).
Construing all ambiguity in favor of the insured, the Court clarifies that the
cracking exclusion applies unless the cracking was the result of a covered loss. In light
of the disputed factual issues identified in the Court’s prior ruling on summary judgment,
a jury should consider whether the cracking exclusion precludes coverage in this
Relevant to the earth movement exclusion articulated in Section 1, the Court’s
prior ruling found that the exclusion could be reasonably interpreted as applying to
conditions concerning soil or water action under the “ground surface.” In light of
plaintiff’s expert opinion that ice formed around the entire subfloor ventilation system,
which was located above grade rather than in the soil, the Court denied summary
judgment to allow a jury’s consideration of the applicability of the exclusion to the facts
of this case. The Court held that a jury should resolve the question of whether freezing
within the ventilation system caused the floor damage, and if so, whether that damage
falls within the earth movement exclusion.
Defendant seeks reconsideration, arguing that the earth movement exclusion
does not require that the freezing take place “below grade;” and even if even if it could
be so construed, the freezing took place under the soil. Defendant argues that the
Court has misread the exclusion because the phrase “under the ground surface
modifies only the term “action of water” and not the word “soil;” defendant asserts
further that “action of water” is not relevant to this case.
Upon reconsideration, the Court will adhere to its decision denying summary
judgment. Construing the inferences of fact most liberally to the plaintiff, it is unclear
whether freezing within an above-grade ventilation system that damaged the freezer
floor would fall within the earth movement exclusion. The exclusion’s plain language
clearly references “Earth Movement,” soil conditions, and action of water under the
ground. Earth movement, the listed soil conditions and water action under the ground
can be reasonably interpreted as meaning that the triggering event takes place under
the ground. Further, the freezing of water, which is asserted in this action, may be
reasonably construed as “water action.” Thus, the exclusion language---its references
to “earth movement,” “soil condition” and “action of water under the ground surface”-indicates that the exclusion may be triggered only by conditions concerning soil or water
action under the “ground surface.”
The parties have submitted expert opinion relevant to the cause of the heaving.
Defendant’s expert consultant John Konicki opined that “the formation of ice lenses in
the soil underneath the crushed rock layer of the Thurston subfloor caused the heaving
at the Thurston warehouse freezer floor” and that the “heaving could not have occurred
without the formation of the ice lenses in the soil beneath the crushed rock layer of the
Plaintiff’s consultant John Kempf indicated that “freezing in the soil contributed to
the overall heaving in certain areas.”
In his deposition testimony, plaintiff’s consultant
John Piho agreed that ice lenses formed under the ground at the Thurston facility,
although he qualified that did not know whether the lensing reached into the soil. He
elaborated that lenses would have gone into soil, but that his opinion was made without
any degree of certainty without looking at the heavage numbers again. He also stated
that he could not answer whether lenses went down into the soil to cause the damage
without making a lot of assumptions and having more information. In his affidavit
submitted in opposition to summary judgment, Piho averred “with reasonable certainty”
[T]he damages to the Thurston freezer floor were the result of the removal of
snow and ice from the roof and the blocking of the ventilation pipes. Damages
began to occur shortly after the pipes became blocked. The damages would
first occur to the insulation, then to the underside of the floor, then to the
formation of spider cracks, and then to the widening of cracks and ultimately to
heaving of the freezer floor itself.
He disagreed with William Konicki’s statements that the formation of ice lenses in the
soil underneath the crushed rock layer of the Thurston subfloor caused the heaving at
the Thurston warehouse freezer floor, and that the heaving could not have occurred
without the formation of ice lenses in the soil beneath the crushed rock layer of the
A plaintiff cannot create a material issue of fact by submitting sham affidavits that
dispute prior testimony. Fischer v. Forrest, 2017 WL 2992663, at *7 (S.D.N.Y. July 14,
2017). This sham affidavit rule does not apply if the statements are not actually
contradictory or the later sworn assertion addresses issues that were not thoroughly or
clearly explored. In re World Trade Ctr. Lower Manhatten Disaster Site Litig., 758 F.3d
202, 213 (2d Cir. 2014). The Court finds that Piho did not wholly contradict his prior
deposition statements. He qualified that his answers required more information and
that his statements were made without reasonable certainty. However, at trial, Piho’s
prior testimony relevant to freezing soil may affect the jury’s credibility determination,
Accordingly, the Court adheres to its prior decision and finds that a jury should
determine the factual issue relevant to whether the earth movement exclusion is
applicable due to a triggering event that took place under the ground.
Failure to Disregard Piho Affidavit Opinion With Regard to Timing of Damage
Defendant faults the Court for accepting the Piho’s affidavit that offers an opinion
as to the timing of the damage to the property, which defendant characterizes as a
sham affidavit. Defendant also maintains that Piho’s opinion about the timing of the
damage should have been disclosed under Federal Rule of Civil Procedure 26.
During the deposition, Piho answered that he not could identify any damage that
occurred prior to August 2011, because he had been focused only on the heavage of
the underfloor. He also stated that he could not identify any specific property damage
to the underfloor, such as cracking of pipes or rearrangement of gravel, or damage to
the mudslab prior to August 2011. He did state that the heaving had started in 2011,
and that he should clarify that point in his report.
In his affidavit offered by plaintiff in opposition to summary judgment, Piho stated:
“In my opinion, damage to the freezer floor by way of spider cracks would have formed
at least six to eight months prior to the floor actually heaving where the fork lift truck
operator would have noticed it and the damage to the insulation would have occurred
even earlier.” In response to defendant’s assertion of a sham affidavit, plaintiff
submitted another affidavit by Piho, explaining the apparent contradictions: “While I
was never asked to identify what damages were likely occurring under the floor leading
up to the heave, I clearly stated the heaving was a process, which while identified in
2012, began earlier in 2011.”
The Court finds that Piho’s deposition testimony and his later affidavit relevant to
timing are not wholly inconsistent. In both his deposition testimony and affidavit, he
indicated that the heaving process had commenced in 2011. Further, his affidavit
explains the sequence of how the damage would occur rather than itemize specific
damage that he had identified as having occurred as of August 2011. Paragraph 24 of
his affidavit states: “Damages began to occur shortly after the pipes became blocked.
The damages would first occur to the insulation, then to the underside of the floor, then
to the formation of spider cracks, and then to the widening of cracks and ultimately to
heaving of the freezer floor itself.”
Upon reconsideration, the Court will adhere to its prior decision accepting Piho’s
affidavit in consideration of the motion for summary judgment. At trial, defendant may
cross examine Piho regarding his deposition testimony. Although the opinions of
Piho’s affidavit are not wholly inconsistent with his deposition testimony, the Court will
allow defendant an opportunity to depose Piho regarding his opinion as to the timing of
the damage, if necessary.
Failure to find no coverage for snow removal under the Policy;
Defendant asserts that the Court erred by finding that a jury should determine
“whether the snow removal constitutes a response to prevent further damage.” Plaintiff
asserts that the snow removal costs are covered by the Policy as costs incurred in
furtherance of plaintiff’s duty to protect the property from increased interior water
damage. Robert Thurston represented that Thurston worked to remove the snow from
the roof after employees had noticed that ceiling tiles were wet and that the roof
appeared to be leaking. Defendant maintains that there is no coverage for routine
maintenance, such as snow removal, because the Policy provides for coverage for
“direct physical loss of or damage to Covered Property at the premises described in the
Declarations caused by or resulting from any Covered Cause of Loss.” Defendant
argues that the Policy’s language setting forth the “Loss Conditions” represent
conditions that do not suggest “that party incurs costs associated with complying with a
contract.” The specific section “Duties In the Event of Loss or Damage” states:
You must see that the following are done in the event of loss or damage to
Covered Property: …Take all reasonable steps to protect the Covered Property
from further damage, and keep a record of your expenses necessary to protect
the Covered Property for consideration in the settlement of the claim. This will
not increase the Limit of Insurance. However, we will not pay for any
subsequent loss or damage resulting from a cause of loss that is not a Covered
Cause of Loss. Also, if feasible, set the damaged property aside and in the best
possible order for examination.
The phrase “keep a record of your expenses necessary to protect the Covered
Property for consideration in the settlement of the claim” creates an ambiguity as to
whether the Policy provides coverage for such costs; construed most favorably to the
insured, the Policy is reasonably construed to provide that response costs are
considered in the settlement of the claim. Thus, it is appropriate for a jury to determine
whether plaintiff’s snow removal comes falls within plaintiff’s duty to take all reasonable
steps to prevent further damage. Upon reconsideration, the Court adheres to its prior
Ceiling Tile Coverage
Defendant claims that the Court erred by denying the motion for summary
judgment on the issue of coverage of replacing tiles for matching purposes. Defendant
asserts it is not required to provide coverage for undamaged tiles. Additionally,
defendant claims that plaintiff did not have matching ceiling tiles in many of its facility
rooms prior to the damage. Defendant also points out that a 2013 Connecticut statute
enacted to require an insurer to cover the costs of matching tiles or other materials does
not apply to plaintiff’s claim. See Conn. Gen. Stat. § 38-316e(a).
Plaintiff submitted the affidavit of Alan Tancreti, who has worked as a licensed
Public Adjuster for approximately twenty-five years. He averred:
It is my opinion that Wausau is obligated to pay the cost to match all ceiling tiles.
In my experience, the general custom in the insurance industry is that if physical
damage occurs to a building such as walls, carpeting, exterior siding or acoustic
ceiling tiles, for example, if replacement of only the area that was damaged
would result in a mismatched condition, the insurance company is required to
pay the cost to match.
Although defendant vigorously denies any such obligation, the Court will adhere
to its prior decision denying summary judgment on this issue. A jury should consider
the questions of fact relevant to plaintiff’s claim for coverage of matching ceiling tiles to
restore its facility to pre-loss condition.
Bad Faith Claims
Defendant complains that the Court erred by denying the motion for summary
judgment on plaintiff’s common law bad faith and CUTPA/CUIPA claims. Defendant
maintains that plaintiff did not submit sufficient evidence to defeat summary judgment.
In its prior ruling, the Court construed the evidence and inferences of fact most
favorably to plaintiff. Upon review, the Court will adhere to its previous decision.
For the foregoing reasons, the motions for reconsideration are GRANTED [docs
137 and 138]. The Court adheres to its prior decision in accordance with clarifications
articulated in this Ruling.
The Court will allow defendant an opportunity to depose Piho for three hours
regarding his opinion as to the timing of the damage, if necessary, within 45 days of this
ruling’s filing date.
This case is scheduled for jury selection on February 2, 2018, with trial to
commence thereafter. The Court will also refer this case to a magistrate judge for a
/s/Warren W. Eginton_______
Warren W. Eginton, Senior U.S. District Judge
Dated this __20th__day of October, 2017 at Bridgeport, Connecticut.
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