Opinion
CV166010324S
03-06-2018
Vincent PERRACCHIO et al. v. HOMESITE INSURANCE COMPANY
UNPUBLISHED OPINION
OPINION
Farley, J.
In this insurance dispute involving crumbling concrete basement walls at the home of the plaintiffs, Vincent and Margaret Ann Perracchio, the defendant, Homesite Insurance Company (" Homesite" ), has moved for summary judgment on all three counts of the plaintiffs’ complaint. The first count alleges breach of contract based on Homesite’s denial of coverage for the damage to the plaintiffs’ basement. The second count alleges Homesite breached the duty of good faith and fair dealing implicit in the insurance contract by misinterpreting and misapplying the terms of the policy in order to justify its denial of coverage. The third count alleges a claim under the Connecticut Unfair Trade Practices Act (" CUTPA" ) based on an alleged general business practice of unreasonably denying coverage for this and similar claims in violation of the Connecticut Unfair Insurance Practices Act (" CUIPA" ). Homesite, which provided homeowners insurance coverage to the plaintiffs for only one year (December 16, 2014 to December 16, 2015), maintains that its policy does not provide coverage for the claimed loss and that the loss occurred prior to the inception of its policy period. Based on that, Homesite asserts further that the plaintiffs have no viable claims for bad faith and for violation of CUTPA/CUIPA. For the reasons set forth below, Homesite’s motion is granted and judgment shall enter in its favor on all three counts.
FACTS
The material facts are undisputed. The plaintiffs’ home in Willington, Connecticut was built in 1988. They purchased the home in November 1991. Over time, the plaintiffs noticed visible cracking patterns in the basement walls of the home. They first noticed them in late Fall 2014. In 2015, they retained William Neal, a professional engineer, to conduct an inspection of their home. Mr. Neal inspected the home on October 5, 2015 and observed that the basement walls had " numerous spider web cracks," they showed " heavy efflorescence," the corners had significant movement distorting the framing above, the walls were bowing inward and the " expanding" concrete had pushed at least one beam above its supporting columns. The chimney was leaning away from the house. In Mr. Neal’s opinion there was an Alkalai-Silica-Reaction (ASR) taking place, a chemical reaction within the concrete causing the damage. He opined that the house was unstable and structurally unsound; that the ASR would continue and there is no way to stop the deterioration of the basement walls. He advised that the house may suffer a catastrophic failure at any time. He recommended that the basement walls be replaced and urged the plaintiffs to vacate the premises until that was done. It is undisputed, however, that the plaintiffs have not replaced the basement walls and they still occupy the house.
After receiving Mr. Neal’s report in October 2015, the plaintiffs made a claim for coverage under their policy with Homesite. The Homesite policy covers " risk of direct loss to property ... if that loss is a physical loss to property." This broad extension of coverage in " Section I- Perils Insured Against" is subject to a number of limitations. Of significance here are just a few of those. First, Section I of the policy does not cover loss " involving collapse, other than as provided in Additional Coverage 8." Section I also does not cover loss " 2. Caused by: ... e. Any of the following: (1) Wear and tear, marring, deterioration; (2) Inherent vice, latent defect, mechanical breakdown; (3) Smog, rust or other corrosion, mold, wet or dry rot; ... (6) Settling, shrinking, bulging or expansion, including resultant cracking of pavements, patios, foundations, walls, floors, roofs or ceilings ..." This section of the policy also states, however, that any " ensuing loss" that results from a condition specified in the limitations on coverage is covered unless it is " excluded or excepted in this policy." Section I- Perils Insured Against is also subject to a number of exclusions, including an exclusion for loss " 2. caused by ... c. Faulty, inadequate or defective: (2) Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction; (3) Materials used in repair, construction, renovation or remodeling; or (4) Maintenance; of all or part of any property." This exclusion is also qualified by an exception for " ensuing loss" not otherwise excepted or excluded.
The court only makes reference to the policy provisions cited by the parties in their briefs and restricts its review to those provisions and the parties’ arguments associated with them.
Unaddressed in the parties’ briefs is the question of who bears the burden of proof on Section I’s limitations, as opposed to its " exclusions," but resolving that issue is not necessary to decide Homesite’s motion.
As referenced above, the policy does provide coverage for collapse under Section I’s " Additional Coverages." As modified by endorsement, the plaintiffs’ policy " insure[s] for direct physical loss to covered property involving abrupt collapse of a building or any part of a building if such collapse was caused by ..." Decay of a building or any part of a building that is hidden from view, unless the presence of such decay is known to an ‘insured’ prior to collapse; ... or (6) Use of defective material or methods in construction, remodeling or renovation." The policy includes a definition of " collapse" with respect to this coverage.
(1) Abrupt collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose.
(2) A building or any part of a building that is in danger of falling down or caving in is not considered to be in a state of collapse.
(3) A part of a building that is standing is not considered to be in a state of collapse even if it has separated from another part of the building.
(4) A building that is standing or any part of a building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion.
The policy also provides coverage for " reasonable repairs" as an " Additional Coverage." That provision states in pertinent part, " [i]n the event that covered property is damaged by an applicable Peril Insured Against, we will pay the reasonable cost incurred by you for necessary measures taken solely to protect against further damage."
In their complaint the plaintiffs claim coverage under both " Section I- Perils Insured Against" and under the " Additional Coverage" for collapse. In count one they allege a breach of contract based on Homesite’s denial of coverage. They assert coverage exists under the additional coverage for collapse, not mentioned in Homesite’s written denial of coverage, and also assert coverage for the " chemical reaction" underlying the progressive deterioration of their basement walls, a subject also not addressed in Homesite’s written denial of coverage. Homesite denied coverage on October 16, 2005, citing the limitations on coverage under " Section I- Perils Insured Against" for " (1) wear and tear, marring, deterioration ... [and] (6) Settling, shrinking, bulging or expansion, including resultant cracking of pavements, patios, foundations, walls, floors, roofs or ceilings ..." Homesite also cited the Section I exclusion for faulty design and materials quoted fully above. In its written denial of coverage, Homesite did not address the additional coverage for collapse, ensuing loss, or the idea that a chemical reaction might be covered under Section I- Perils Insured Against. Homesite did " reserve the right to raise additional policy terms, conditions, exclusions and defenses ..." in its letter.
Following Homesite’s denial of coverage, the plaintiffs commenced this lawsuit on February 16, 2016. In addition to alleging breach of contract in count one, in count two the plaintiffs allege Homesite breached the implicit duty of good faith and fair dealing in the insurance contract, depriving them of the benefits of their insurance, claiming that Homesite " unreasonably and in bad faith, sought out other policy provisions [other than those the plaintiffs argue afford coverage] and interpreted these and other policy provisions in a manner for the purpose of denying benefits despite the aforementioned provisions of the policy conferring benefits." In count three, the plaintiffs assert a CUTPA/CUIPA claim reiterating the same misinterpretation and misapplication of relevant policy provisions by Homesite in providing a " false and misleading denial of coverage" and alleging that Homesite " has regularly denied claims in similar manners or on similar grounds or other grounds." This count also appears to allege that Homesite is engaged in a scheme, plan, or conspiracy to indiscriminately deny all collapse claims associated with the crumbling basement walls phenomenon in eastern Connecticut, carried out through the Insurance Services Organization (" ISO" ).
THE PARTIES’ CLAIMS ON SUMMARY JUDGMENT
Homesite has moved for summary judgment on several grounds. First, Homesite maintains there is no genuine issue of material fact on the threshold question of whether the loss suffered by the plaintiffs occurred during the Homesite policy period. Homesite further claims there is no coverage under Section I- Perils Insured Against due to the limitations on the scope of coverage in that section, including the limitation for loss caused by " deterioration" and for loss caused by " bulging or expansion, including resultant cracking, of foundations [or] walls." Further under that section, Homesite relies upon the exclusion for loss caused directly or indirectly by " Faulty, inadequate or defective ... materials used in construction." Homesite also argues that the additional coverage for collapse is inapplicable because the undisputed facts establish that the condition of the plaintiffs’ basement walls falls outside the definition of " abrupt collapse" for which coverage is afforded. Homesite goes on to argue that the common law bad faith count and the CUTPA/CUIPA counts must fail because there is no coverage under the policy and, even if coverage is found, because its denial was made in good faith as demonstrated by the judicial decisions that have upheld its interpretation of the policy provisions.
In response to Homesite’s motion, the plaintiffs argue they have a " potential claim" that their loss is covered under the Additional Coverage for collapse because the restrictive definition of " collapse" is ambiguous. They also argue that coverage is afforded under Section I- Perils Insured Against, despite the limitations and exclusions relied upon by Homesite, because coverage is sought for the chemical reaction taking place inside the basement walls, something not explicitly addressed in the policy and, therefore, within the scope of coverage for " the risk of direct loss to property ... if that loss is a physical loss to property." The plaintiffs also argue that the use of the phrase " risk of" prefacing the grant of coverage for " direct loss to property" expands the scope of coverage such that the coverage " contemplates not only the chemical reaction itself, but risks associated with the occurrence of the chemical reaction such as a total collapse of the structure." Because coverage is provided for the chemical reaction, the plaintiffs argue, the limitations and exclusions cited by Homesite are inapplicable because the cracking, deterioration, and defective materials " are simply the result of the chemical reaction" for which coverage is allegedly afforded. The plaintiffs further claim the " risk of language triggers coverage under the reasonable repairs provision of the policy. Because the chemical reaction is a covered peril, according to the plaintiffs, as are the risks associated with the chemical reaction, the cost to repair the concrete is covered, " particularly to protect the property from ‘further damage.’ " Finally, the plaintiffs claim, without elaboration, that their loss is an " ensuing loss" resulting from conditions specified in the limitations of coverage.
This claim, as well as the ensuing loss claim referenced below, is not among those asserted in the plaintiffs’ complaint, which otherwise makes reference to the policy terms pursuant to which they claim coverage.
In response to Homesite’s argument that the loss did not occur during the policy period, the plaintiffs argue that they " filed a timely claim" with Homesite " as there is an issue of fact as to precisely when the issue arose with this type of issue." Homesite has not asserted a timeliness issue with respect to either notice or the commencement of suit. The plaintiffs appear to be suggesting, however, that there is a question of fact as to when the loss occurred.
Neither party has adequately briefed the trigger of coverage issue. Based on its argument, it is apparent that Homesite takes either a manifestation position or an injury in fact position, whereas the plaintiffs fail to articulate any discernible position. No law is cited by either party on the subject. This court has previously applied a manifestation trigger to a similar first party property claim involving a very similar progressive loss. Musgrave v. Twin City Fire Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-15-6009840-S (November 7, 2017) (Transcript of Proceedings); see also Prudential-LMI Commercial Ins. v. Superior Court, 51 Ca1.3d 674, 798 P.2d 1230 (1990); Mangerchine v. Reaves, 63 So.3d 1049 (La.App. 1 Cir., 2011), rehearing denied; C. Lantz, " Triggering Coverage of Progressive Property Loss: Preserving the Distinctions Between First-And Third-Party Insurance Policies," 35 Wm. & Mary L.Rev. 1801 (1994); D. Grand, " Nailing Down Occurrence Triggers for Property Damage in the Wake of Redevelopment- Why a Distinction Should Be Made Between First and Third Party Policies," 68 La. L.Rev. 605 (2008). Because the parties have not adequately briefed the trigger issue, and its resolution is not required to decide Homesite’s motion, the court does not reach the question of whether the plaintiffs’ loss occurred during the Homesite policy period.
As to the bad faith count, the plaintiffs argue the claims must stand because the Homesite policy " provides for reasonable repairs and collapse, neither of which were mentioned in the denial letter." As the court understands this claim, the plaintiffs argue that if there is coverage under either of those policy provisions, it was bad faith on the part of Homesite not to address those issues in its denial letter. Regarding the CUTPA/CUIPA count, the plaintiffs recite boilerplate law on those claims and state " the [p]laintiffs have nothing further to provide this [c]ourt with other than the allegations that they are of the belief that coverage is warranted and information may have been shared through ISO, as is common practice amongst most insurance companies." No evidence of any ISO related activity has been submitted.
In their reply, Homesite addresses the plaintiffs’ " chemical reaction" argument, their interpretation of the " risk of" language in the policy, and the ensuing loss argument, as well as further advancing its arguments on collapse and the extra-contractual claims. Homesite does not address the " reasonable repairs" argument.
The court heard the parties at oral argument on October 23, 2017. Based on the written submissions and the arguments of the parties, the court concludes that there is no genuine issue of material fact concerning the plaintiffs’ claims for coverage under either the Additional Coverage for collapse or Section I- Perils Insured Against. For that and other reasons, the court also finds that the plaintiffs’ extra-contractual claims are not viable, and judgment shall enter on all counts in favor of Homesite.
SUMMARY JUDGMENT STANDARDS
" [S]ummary judgment shall be rendered forthwith if the pleadings, affidavits and other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law ... In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Stuart v. Freiberg, 316 Conn. 809, 820-21, 116 A.3d 1195 (2015). " The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law ... and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact ... A material fact ... [is] a fact which will make a difference in the result of the case." (Internal quotation marks omitted.) Id., 821.
" To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact ... When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue ... Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue." (Internal quotation marks omitted.) Ferri v. Powell-Ferri, 317 Conn. 223, 228, 116 A.3d 297 (2015).
INSURANCE POLICY INTERPRETATION
An insurance contract is interpreted by the court according to " the same general rules that govern the construction of any written contract." (Internal quotation marks omitted.) Johnson v. Connecticut Ins. Guaranty Ass’n, 302 Conn. 639, 643, 31 A.3d 1004 (2011). Thus, " [t]he determinative question is the intent of the parties, that is, what coverage the ... insured expected to receive and what the insurer was to provide, as disclosed by the provisions of the policy." (Internal quotation marks omitted.) Id. If the policy’s terms are " clear and unambiguous," then that language " must be accorded its natural and ordinary meaning." (Internal quotation marks omitted.) Id. If the terms of the insurance policy are " ambiguous," however, meaning " reasonably susceptible to more than one reading," then ambiguity " must be construed in favor of the insured because the insurance company drafted the policy." (Internal quotation marks omitted.) Id. " The court must conclude that the language should be construed in favor of the insured unless it has ‘a high degree of certainty’ that the policy language clearly and unambiguously excludes the claim." Liberty Mutual Ins. Co. v. Lone Star Industries, Inc., 290 Conn. 767, 796, 967 A.2d 1 (2009), citing Kelly v. Figueiredo, 223 Conn. 31, 37, 610 A.2d 1296 (1992).
" In determining whether the terms of an insurance policy are clear and unambiguous, [a] court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity ... Similarly, any ambiguity in a contract must emanate from the language used in the contract rather than from one party’s subjective perception of the terms ... As with contracts generally, a provision in an insurance policy is ambiguous when it is reasonably susceptible to more than one reading." (Internal quotation marks omitted.) Lexington Ins. Co. v. Lexington Healthcare Group, 311 Conn. 29, 37-38, 84 A.3d 1167 (2014), quoting Johnson v. Connecticut Ins. Guaranty Ass’n, supra, 302 Conn. 643. " [The mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous." (Internal quotation marks omitted.) Liberty Mutual Ins. Co. v. Lone Star Industries, Inc., supra, 290 Conn. 796. Nevertheless, " [c]ontext is often central to the way in which policy language is applied; the same language may be found both ambiguous and unambiguous as applied to different facts ... Language in an insurance contract, therefore, must be construed in the circumstances of a particular case, and cannot be found to be ambiguous or unambiguous in the abstract ... In sum, the same policy provision may shift between clarity and ambiguity with changes in the event at hand ... and one court’s determination that a term ... was unambiguous, in the specific context of the case that was before it, is not dispositive of whether the term is clear in the context of a wholly different matter." (Citations omitted; emphasis omitted; internal quotation marks omitted.) Lexington Ins. Co. v. Lexington Healthcare Group, Inc., supra, 41-42.
BREACH OF CONTRACT
A. Additional Coverage for Collapse
Homesite argues there is no genuine issue of material fact that the plaintiffs’ home has not experienced a " collapse" as defined in the policy and their claimed loss, therefore, is not covered under the Additional Coverage for collapse. It is undisputed that there is a progressive deterioration of the basement walls in the plaintiffs’ home and there is evidence to suggest that this will continue until the basement walls crumble and the house above then falls to the ground. Nevertheless, the house has not fallen down or caved in " with the result that the building or part of the building cannot be occupied for its intended purpose." The plaintiffs have continued to occupy the house from 2015, when they reported the loss, until the present time. The house may be " in danger of falling down or caving in" sometime in the future, as Mr. Neal suggests, but under the definition of " collapse," a building in that condition " is not considered to be in a state of collapse." The building is still standing and the definition of " collapse" states a building that is still standing " is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion."
Despite the effort to clarify what is required to constitute a covered " collapse," the plaintiffs argue that Homesite has fallen short of drafting a clear and unambiguous definition of " collapse" and maintains the court must consequently resort to the default definition set forth in Beach v. Middlesex Mutual Ins. Co., 205 Conn. 246, 252-53, 532 A.2d 1297 (1987) (in absence of definition of " collapse" coverage will be found when there has been " substantial impairment of structural integrity." ) The plaintiffs argue that paragraphs (2), (3), and (4) of the definition of collapse are " qualifiers" that render the definition ambiguous when juxtaposed with the principal definition set forth in paragraph (1). They do not explain why these paragraphs render the entire definition ambiguous, but they cite Malbco Holdings, LLC v. AMCO Ins. Co., 629 F.Supp.2d 1185 (D.Ore. 2009), in support of that proposition.
In Malbco, a local building department threatened to " red tag" a hotel because of its dangerous condition caused by a long term water leak that had resulted in twenty broken or damaged trusses holding up the floor and guest rooms above a pool, exercise room, and conference room. The hotel owner sought coverage under a collapse provision identical to the one in Homesite’s policy. Before making that claim, it had been discovered that some parts of the hotel had already fallen over three inches, but it was disputed whether that had happened suddenly or over an extended period of time, thus placing the " abruptness" issue into dispute. The insurer sought summary judgment nevertheless because its interpretation of the " collapse" definition required that the building " completely fall to the ground" before coverage would attach. On that question, the court concluded the policy was ambiguous. While the court considered the insurer’s interpretation plausible, the insured argued that the definition’s requirement that the building or part thereof " cannot be occupied for its intended purpose" meant that something short of a complete falling down would be within the scope of coverage. Otherwise, the occupancy requirement would be surplusage, since " [c]learly one cannot occupy a building if it has completely fallen down or caved in." Id., 1196. The court found that interpretation plausible as well and concluded the policy was ambiguous. The issue and circumstances in this case are different than those involved in Malbco . Here there is no dispute over whether the house could not be " occupied for its intended purpose" at the time of the alleged loss. The plaintiffs have continued to live in the house and there is no evidence that any local official has determined otherwise.
Malbco does not stand for the proposition for which the plaintiffs have cited it. In Malbco, the court observed that " [o]nly subsection (a) actually defines the term ‘collapse.’ The other subsections serve merely to clarify other situations in which a building is not in a state of collapse ..." Id., 1195. The court found an ambiguity in subsection (a) under the circumstances presented in that case (subsection (1) in this case). Even if the court’s analysis in Malbco is presumed to be correct, it does not support the plaintiffs’ view that there is an ambiguity under the circumstances of this case. Lexington Ins. Co. v. Lexington Healthcare Group, Inc., supra, 311 Conn. 41-42 (the question of ambiguity is not determined in the abstract). The court did not find that the " qualifiers" in subsections (2), (3) and (4), as the plaintiffs label them, are inherently contradictory or inconsistent with subsection (1) rendering the entire definition ambiguous. The court did consider those subsections consistent with the insured’s interpretation of subsection (1).
As the court stated in Malbco, subsections (2), (3) and (4) clarify that certain circumstances do not satisfy the requirements of the principal definition set forth in subsection (1). They do not obscure the definition. Along with subsection (1) they are clearly intended to fill the gap perceived by the Connecticut Supreme Court in Beach, and by other courts as well, in earlier policies that lacked a definition of " collapse." Subsection (2) clarifies that just because there is a danger of falling down or caving in does not mean that subsection (1) has been satisfied. Subsection (3) clarifies that mere separation of one part of a building from another does not constitute a collapse if that part of the building is still standing. Subsection (4) clarifies that cracking, bulging, etc. does not satisfy subsection (1) if the building, or the part of the building at issue, is still standing. None of these clarifications, however, indicate that there is no collapse under any circumstance where the building is still standing. Whether that is the case can only be determined based on an interpretation of subsection (1) and the significance of the phrase " cannot be occupied for its intended purpose." That issue is not before this court because it is undisputed that the plaintiffs continued to occupy the home long after the Homesite policy expired.
The plaintiffs also cite Dalton v. Harleysville Worcester Mutual Ins. Co., 557 F.3d 88 (2d Cir. 2009), in support of their argument that Homesite’s definition of " collapse" is ambiguous. Dalton, however, supports the opposite conclusion. In Dalton, hidden decay in a wall was so severe that the City of New York issued a notice to vacate. The homeowners claimed the condition constituted a collapse under their insurance policy but the insurer denied the claim. The district court entered summary judgment for the insurer on the basis that a " collapse" under the policy required " a total or near total destruction of the property." The policy, however, did not define " collapse" and the Second Circuit held that the district court had misread New York law on the subject. Finding New York law unsettled and the policy ambiguous in the absence of a definition of " collapse," the court reversed summary judgment. In a footnote, however, the court noted that a policy providing " that a collapse was ‘an abrupt falling down or caving in’ and that ‘a building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, or expansion’ ... addresses the ambiguity ..." (Citation omitted.) Id., 92 n.1. Thus, if anything, Dalton supports Homesite’s position, as do a number of other cases that have addressed similar crumbling concrete claims involving the same definition of collapse. Jemiola v. Hartford Casually Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-15-6008837-S (Cobb, J., March 2, 2017), appeal pending, SC 19978; Liston-Smith v. CSAA Fire & Casualty Ins. Co., United States District Court, Docket No. 3:16CV00510 (JCH) (D.Conn. October 25, 2016); Alexander v. General Ins. Co. of America, United States District Court, Docket No. 3:16CV59 (SRU) (D.Conn. July 7, 2016) (Transcript of Oral Ruling).
Aside from the plaintiffs’ continued occupancy of the home, the Additional Coverage for collapse covers " abrupt collapse." No attempt has been made by the plaintiffs in this case to argue that " abrupt" is ambiguous either in the abstract or as applied to the circumstances of this case. It is undisputed that the deterioration taking place in the plaintiffs’ basement walls is a gradual, progressive process that takes many years to result in a complete falling down of the building. It is a condition whose progress the plaintiffs have had the unfortunate opportunity to witness themselves " over time." Because there is no argument in this case that the word " abrupt" is ambiguous in this context, and because it is a progressive process at issue, the court finds this essential element of the definition of collapse to be unsatisfied in this case. See Jemiola v. Hartford Casualty Ins. Co., supra ; England v. Amica Mutual Ins. Co., United States District Court, Docket No. 3:16CV1951 (MPS) (D.Conn. September 11, 2017).
The court concludes there is no coverage for the plaintiffs’ alleged loss under the Additional Coverage for collapse.
B. Section I- Perils Insured Against
Having concluded there is no coverage for the plaintiffs’ alleged loss under the Additional Coverage for collapse, the question remains whether the plaintiffs’ loss is covered under the general all risk coverage afforded under " Section I- Perils Insured Against. Under this section, the policy covers the insured for " risk of direct loss to property ... if that loss is a physical loss to property." That coverage is subject to the limitations and exclusions recited above and discussed below.
1. Limitations on Coverage
Section I of the Homesite policy limits the scope of " physical loss" to exclude any loss " Caused by e. Any of the following: (1) Wear and tear, marring, deterioration ... (6) Settling, shrinking, bulging or expansion, including resultant cracking of pavements, patios, foundations, walls, floors, roofs or ceilings ..." Homesite maintains the damage to the plaintiffs’ home has been caused by " deterioration" and by " bulging or expansion, including resultant cracking, of foundations [or] wails:" The plaintiffs argue, however; the deterioration, bulging; expansion and cracking in their basement walls did not cause their loss- they were caused by the loss. The " loss," they argue is the chemical reaction taking place within the concrete walls. The proposition that the chemical reaction itself constitutes the " physical loss to property" covered in Section I is one several Connecticut federal district courts have recently rejected in crumbling concrete cases. See England v. Amica Mutual Ins. Co., supra, United States District Court, Docket No. 3:16CV1951 (MPS).
See also Hurlburt v. Massachusetts Homeland Ins. Co., United States District Court, Docket No. 3:17CV503 (VAB) (D.Conn. February 23, 2018); Zamichiei v. CSAA Fire & Casually Ins. Co., United States District Court, Docket No. 3:16CV739 (VAB) (D.Conn. February 20, 2018); Mazzarella v. Amica Mutual Ins. Co., United States District Court, Docket No. 3:17CV598 (SRU) (D.Conn. February 8, 2018); Chernosky v. Amica Mutual Ins. Co., United States District Court, Docket No. 3:17CV01047 (VLB) (D.Conn. January 24, 2018); Makufka v. CSAA Fire & Casualty Ins. Co., United States District Court, Docket No. 3:16CV00567 (VLB) (D.Conn. January 18, 2018); Liston-Smith v. CSAA Fire & Casualty Ins. Co., United States District Court, Docket No. 3:16CV510 (JCH) (D.Conn. December 15, 2017); Agosti v. Merrimack Mutual Fire Ins. Co., United States District Court, Docket No. 3:16CV01686 (SRU) (D.Conn. August 28, 2017).
In England, the court first observed that a claim that the chemical reaction itself constitutes the loss is inconsistent with the plaintiffs’ alternative claim that the plaintiffs’ " loss" was caused by a collapse. The doubt this casts over the argument is not dispositive, however, particularly because the court has already concluded the collapse coverage is not applicable. Conceptually, however, it is an implausible interpretation of the policy, which covers " direct ... physical loss to property." There are multiple chemical reactions taking place inside every home and even within the concrete walls. Mr. Neal observes one of them when he notes the presence of efflorescence in the plaintiffs’ basement. There is no claim that efflorescence is a loss or the cause of a loss. The alkali-silica reaction (ASR) identified by Mr. Neal, however, allegedly results in damage because of the nature of its impact on the concrete. It causes the concrete to deteriorate, bulge, expand, and crack. It is because of the physical damage to the concrete walls that the plaintiffs may be considered to have suffered a " loss." As the England court points out, citing Capstone Building Corp. v. American Motorists Ins. Co., 308 Conn. 760, 782, 67 A.3d 961 (2013), Connecticut law recognizes a " difference between a loss and its cause."
Specifically, courts interpreting insurance policies to determine the scope of insurance coverage have distinguished between loss or damage, on the one hand, and processes that could- but have yet to- cause loss or damage, on the other, ruling that the latter do not fall within the scope of coverage where the policies require physical loss or damage to trigger coverage. In Capstone Building Corp. v. American Motorists [Ins. Co. ], the Connecticut Supreme Court held that ‘the escape of carbon monoxide, without more, is not property damage,’ and therefore did not constitute ‘physical injury to tangible property, including all resulting loss of use of that property’ as required to trigger coverage under a commercial general liability policy.England v. Amica Mutual Ins. Co., supra .
Formulating their argument somewhat differently, the plaintiffs also note that the policy language limits coverage for loss " caused by" deterioration, bulging, cracking and expansion. (Emphasis added.) In the circumstances of this case, they argue, the deterioration, bulging, cracking, and expansion are not the cause of the loss, but rather one of the effects of the chemical reaction, which is the " cause" of the loss. The same argument concerning the same policy language also fell short in England . There the court held that the only " direct physical loss" claimed " is the cracking and deterioration of the basement walls, and the financial ‘loss’ therefrom, which is expressly excluded ... It does not matter whether the originating event behind the cracking and deterioration was a chemical reaction; the exclusions in the [p]olicies make no exception for losses for which the cause is itself a product of a chemical reaction. Indeed, many of the loss-producing causes listed in the exclusions either are the product of chemical reactions or are broad enough to include chemical reactions." (Footnote omitted.) Id. In other words, if the cause of the loss, for example deterioration, is itself preceded by and caused by a chemical reaction, that does not mean that the " loss" was not caused by deterioration. Again, the " loss," as England points out, " is the damage or the detrimental change to the insured that is the product of these excluded processes and events." Id.
In support of their arguments, the plaintiffs cite Khuns v. Bay State Ins. Co., 866 N.Y.S.2d 92 (Sup.Ct. 2008), aff’d, 910 N.Y.S. 822, 78 A.D.3d 1496 (2010). In Kuhns, a claim that a wall collapsed was denied by the insurer, not because there was a dispute as to whether there was a collapse but because the insurer determined the cause of the collapse was not included among the causes covered by the policy. The insurer attributed the cause of collapse to underground water pressure. The plaintiffs’ expert, however, attributed the cause of the collapse to deteriorating mortar in the wall and the plaintiff argued that fell within the scope of " hidden decay," a recognized cause of collapse under the policy. The court denied the defendant’s motion for summary judgment because of this dispute. How this relates to the plaintiffs’ claim that the chemical reaction in their basement walls constitutes the loss is unclear. As best the court can glean, the plaintiffs may analogize the penetrating water in the Kuhns case to the chemical reaction in their basement walls, but there was no indication in Kuhns that the court considered the penetrating water to be the loss, as opposed to the collapse of the wall.
2. Exclusion for Faulty, Inadequate or Defective Materials
Section I of the Homesite policy contains an exclusion providing that Homesite does " not insure for loss ... caused by ... [f]aulty, inadequate or defective ... materials used in repair, construction, renovation or remodeling ..." Homesite argues that the plaintiffs’ alleged loss " is a claim for loss caused by defective concrete used in construction." The plaintiffs do not directly address the language of this exclusion, but seek to avoid it in the same fashion they attempted to avoid the coverage limitations discussed above. The plaintiffs argue that the defective concrete is not the cause of the loss; rather the chemical reaction is the loss, or the cause of the loss. The same reasoning applied to the plaintiffs’ arguments that the coverage limitations are inapplicable disposes of the plaintiffs’ claim that this exclusion does not apply.
3. Ensuing Loss
Nor does the " ensuing loss" provision that qualifies the limitations and exclusion discussed above change the outcome. Under the ensuing loss provision, even if the loss caused by defective concrete is excluded, " any ensuing loss to property ... not excluded or excepted in this policy is covered." The plaintiffs claim the benefit of this provision but do not explain why they are entitled to that benefit. The issue, therefore, is inadequately briefed. Still, under the terms of the policy, an " ensuing loss" must be a covered " loss." The plaintiffs do not explain what loss, other than the alleged collapse or the chemical reaction determined above not to be a " loss," has occurred and that should be considered an " ensuing loss." In Mazzarella v. Amica Mutual Ins. Co., United States District Court, Docket No. 3:17CV598 (SRU) (D.Conn. February 8, 2018), the court discussed the ensuing loss provision in the context of a crumbling concrete case. The court explained that an ensuing loss must be something distinct from the non-covered event, in this case the deteriorating basement walls, that is itself within and not excluded from coverage. " Further, [w]here a property insurance policy contains an exclusion with an exception for ensuing loss, courts have sought to assure that the exception does not supersede the exclusion by disallowing coverage for ensuing loss directly related to the original excluded risk." (Internal quotation marks omitted.) Id., quoting Yale University v. Cigna Ins. Co., 224 F.Supp.2d 402 (D.Conn. 2002). That appears to be what the plaintiffs are attempting to do here and, thus, the ensuing loss provision is inapplicable.
4. " Risk of Loss
Finally, the plaintiffs offer an interpretation of Section I’s extension of coverage that vastly expands the nature of the coverage offered. The plaintiffs point out that the Homesite policy does not just state that it insures for direct, physical loss to property; the policy says it insures " against risk of direct loss to property ... only if that loss is a physical loss to property." (Emphasis added.) Under the plaintiffs’ interpretation of this language, there does not have to be an actual, direct physical loss. Merely the risk of such a loss is within the scope of the coverage offered. The plaintiffs do not explain why such a risk is not also the subject of the limitations and exclusions that follow and were discussed above. See Liston-Smith v. CSAA Fire & Casualty Ins. Co., supra, United States District Court, Docket No. 3:16CV00510 (JCH).
The plaintiffs do mention the Additional Coverage for reasonable repairs included in the policy. Conceivably an insurer might agree to cover, for example, the cost of repairs to basement walls in order to prevent the risk of a future collapse. Prerequisite to the Additional Coverage for reasonable repairs in the policy, however, is that the " covered property is damaged by an applicable Peril Insured Against." Once again, the chemical reaction in the concrete is not damage or a loss and, therefore, the reasonable repairs provision is not triggered. See
Moreover, this interpretation is so expansive that the only limits on coverage are the limits of the imagination concerning what things might go wrong. Further, there is no reliable way to quantify such a risk of loss, except in the sense that the risk is already quantified in the premium- something the policyholder is required to pay, not the insurer.
The " risk of’ phrase cited by the plaintiffs merely identifies the language that follows as the description of what is covered under Section 1 of the policy. The use of the phrase can be viewed as somewhat redundant in this context. It does not add any substantive meaning to the extension of coverage and other policies have dispensed with it. See Chernosky v. Amica Mutual Ins. Co., United States District Court, Docket No. 3:17CV01047 (VLB) (D.Conn. January 24, 2018). To the extent one might attempt to extract an ambiguity out of this use of the phrase, however, that effort is unavailing. The court " will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity." (Internal quotation marks omitted.) Lexington Ins. Co. v. Lexington Healthcare Group, Inc., supra, 311 Conn. 37-38. The creative legal mind dissecting the language of an insurance policy must be tempered by reason. The rule of construction placing the burden of an ambiguity on an insurer " applies only when the terms are, without violence, susceptible of two equally reasonable interpretations ..." (Internal quotation marks omitted.) R.T. Vanderbilt Company, Inc. v. Hartford Accident & Indemnity Co., 171 Conn.App. 61, 90, 156 A.3d 539, cert. granted, 327 Conn. 923, and cert. granted, 327 Conn. 923, and cert. granted, 327 Conn. 925 (2017), quoting Misiti, LLC v. Travelers Property Casualty Co. of America, 308 Conn. 146, 155, 61 A.3d 485 (2013). That is not the case here.
The plaintiffs cite 401 Fourth Street, Inc. v. Investors Ins. Group, 823 A.2d 177 (Pa.Super. 2003), aff’d, 583 Pa. 445, 879 A.2d 166 (2005), in support of their expansive interpretation of the policy. In that case, a parapet wall was bowing, leaning inward, in danger of completely collapsing and needed immediate repairs. The insured sought coverage for collapse under a substantially different collapse provision than the one in these plaintiffs’ policy. That provision, however, included similar " risk of" language, providing coverage for " loss or damage caused by or resulting from risks of direct physical loss involving collapse of a building or any part of a building ..." " Collapse" was not defined by the policy but the policy said it " does not include settling, cracking, shrinkage, bulging or expansion." The insurer moved for summary judgment claiming that the collapse coverage did not apply unless the building or a part of it actually fell. The court disagreed, relying in part on the " risk of" language, holding the words " clearly broaden the policy’s coverage to include something less than a structure completely falling to the ground." Id., 179. Of course, numerous Connecticut courts have reached the same conclusion about very similar policy language that does not include the " risk of" language. See Roberts v. Liberty Mutual Fire Ins. Co., Docket No. 3:13CV00435 (SRU) (D.Conn. August 28, 2017), and cases cited therein. The court in 401 Fourth Street blithely and unpersuasively dismissed the " concern that this interpretation would unfairly subject the insurer to liability based on ‘potentially infinitesimal risks’ or ‘the existence of some small or vague possibility’ of collapse." 401 Fourth Street, Inc. v. Investors Ins. Group, supra, 179. More persuasively, the dissent observed, [a]ll insurance is meant to cover risks. I do not believe that the addition of the term ‘risks’ to the language of this policy broadens the coverage." Id., 180.
The court concludes there is no coverage for the plaintiffs’ alleged loss under Section I- Perils Insured Against.
BAD FAITH AND CUTPA/CUIPA
Having concluded there is no coverage for the plaintiffs’ alleged loss under the Homesite policy, the court must consider in that context the viability of the plaintiffs’ common-law bad faith claims and their unfair insurance practice claims under CUTPA/CUIPA. Homesite argues that these claims must fail because there is no coverage under the policy and, even if coverage had been found, because its denial was made in good faith as demonstrated by the judicial decisions that have upheld its interpretation of the policy provisions.
The court does not reach the latter ground because no coverage has been found. ---------
Regarding the common-law bad faith claim, the plaintiffs argue that if there is coverage under the Additional Coverages for collapse or reasonable repairs, it was bad faith on the part of Homesite not to address those issues in its denial letter. Because the court has found there is no coverage under the policy, including those provisions, the common-law bad faith claim must fail in light of the plaintiffs’ allegations and their position on summary judgment. " [B]ecause the covenant of good faith and fair dealing only ‘requir[es] that neither party [to a contract] do anything that will injure the right of the other to receive the benefits of the agreement,’ it is not implicated by conduct that does not impair contractual rights." (Internal quotation marks omitted.) Capstone Building Corp. v. American Motorists Ins. Co., supra, 308 Conn. 794, quoting Home Ins. Co. v. Aetna Lift & Casualty Co., 235 Conn. 185, 200, 663 A.2d 1001 (1995). Because the plaintiffs have not been deprived of any benefits under the Homesite policy, there can be no claim for bad faith.
The plaintiffs’ CUTPA/CUIPA claim reiterates the allegations set forth in the common-law bad faith claim concerning the misinterpretation and misapplication of relevant policy provisions by Homesite and alleges that Homesite " has regularly denied claims in similar manners or on similar grounds or other grounds." This count also appears to allege that Homesite is engaged in a scheme, plan, or conspiracy to indiscriminately deny all collapse claims associated with the crumbling basement walls phenomenon in this judicial district, carried out through ISO. Whatever communications may have taken place within ISO, the court has concluded that the denial of coverage was not wrongful. " When CUTPA and CUIPA claims are premised on denial of coverage under an insurance policy and the insurer’s interpretation of the policy is correct, ‘there can be no genuine issue of material fact as to whether the application of that interpretation as a general business practice constituted oppressive, unethical or unscrupulous conduct in violation of the statues.’ " Liston-Smith v. CSAA Fire & Casualty Ins. Co., supra, United States District Court, Docket No. 3:16CV00510 (JCH), quoting Zulick v. Patrons Mutual Ins. Co., 287 Conn. 367, 378, 949 A.2d 1084 (2008).
CONCLUSION
For all of the foregoing reasons, the defendant Homesite’s motion for summary judgment is granted as to all counts of the complaint.
Liston-Smith v. CSAA Fire & Casualty Ins. Co., supra, United States District Court, Docket No. 3:16CV00510 (JCH).