Opinion
TTDCV166010936S
12-14-2018
Michael WILLENBORG et al. v. UNITRIN PREFERRED INS. CO.
UNPUBLISHED OPINION
OPINION
Sicilian, J.
The plaintiffs, Michael and Anne Willenborg, brought this action against four insurance companies that insured their home from July 1996 through the filing of their complaint in July 2016. The plaintiffs allege that the frost walls of their home deteriorated because material in the concrete used in the walls caused oxidation and expansion of the concrete. They allege that the process is irreversible and would eventually have caused the frost walls to fall, causing the entire home to fall. To prevent this, the plaintiffs removed and replaced the original frost walls. The plaintiffs allege that the insurance policies issued by the four defendants cover their asserted loss but that all four defendants have either denied coverage or the plaintiffs have a basis to expect them to deny coverage. The plaintiffs assert claims for breach of contract, declaratory judgment, and unfair insurance and trade practices. The defendants are Unitrin Preferred Insurance Company (hereinafter "Kemper"), General Insurance Company of America (hereinafter "General"), Utica First Insurance Company (hereinafter "Utica"), and The Travelers Home and Marine Insurance Company (hereinafter "Travelers"). Each defendant has moved for summary judgment, arguing that there are no material facts genuinely in dispute and that the plaintiffs’ alleged loss is not covered by any of the four policies.
The following facts are undisputed. The plaintiffs purchased their home on July 18, 1996. In connection with the purchase, the plaintiffs had a home inspection conducted. The inspection revealed one or more cracks in the concrete frost walls of the home. Some years later, the plaintiffs noticed additional cracking in the frost walls. During 2015, the plaintiffs were advised by an engineer and a home inspector that the frost walls of their home were constructed with faulty materials. In 2016, an engineer retained by the plaintiffs advised them that the structural integrity of the frost walls was substantially impaired.
Kemper insured the premises from July 1996 to July 2011; Safeco insured the premises after Kemper, from 2011 to 2014; Utica insured the premises from 2014 to 2015; and Travelers insured the premises after Utica and at least through the filing of this action in 2016.
Additional undisputed facts will be identified in the discussion below.
DISCUSSION
A number of Superior Court and federal court decisions in so-called "crumbling foundation" cases such as this one have considered various issues relating to insurance coverage for the alleged losses, and their decisions are instructive on the issues raised here.
I. Kemper’s Motion for Summary Judgment
a. Breach of Contract Claim
The plaintiffs’ second amended complaint (complaint) asserts claims against Kemper for breach of contract, and violation of the Connecticut Unfair Insurance Practices Act (CUIPA), General Statutes § 38a-815 et seq., and Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. It is undisputed that Kemper insured the plaintiffs’ home from July 1996 to July 2011. There is also no dispute regarding the terms of the policy, which requires a challenge to a denial of coverage to be brought "within one year after the date of loss." The policy covers only a loss "which occurs during the policy period." Kemper argues that the policy period ended in July 2011 and, therefore, it is not liable because suit was not brought until 2016.
The plaintiffs filed a request for leave to file an amended complaint along with their proposed second amended complaint on August 1, 2017. The second amended complaint became the operative complaint when none of the defendants filed an objection to the request to amend within fifteen days. See Practice Book § 10-60.
Connecticut has extended limitation periods such as this by statute, first to eighteen months, effective July 1, 2012, and then to twenty-four months, effective October 1, 2014. General Statutes §§ 38a-307, 38a-308. Kemper’s one-year limitation is unaffected because the plaintiffs’ policy ended in 2011.
Kemper relies on Soderburg v. Unitrin Preferred Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-16-6010893-S (July 24, 2018, Sferrazza, J.) (66 Conn.L.Rptr. 734, 735), which in turn relies on Dino v. Safeco Ins. Co. of America, Superior Court, judicial district of Tolland, Docket No. CV-16-6010428-S (June 28, 2018, Farley, J.) (66 Conn.L.Rptr. 652). Judge Farley’s decision in Dino thoroughly analyzed the issues and arguments regarding when a loss is triggered for purposes of determining coverage under insurance policies containing provisions similar to those in the Kemper policy. Id., 653-60. His persuasive analysis concluded that a manifestation trigger-when the loss, injury, or damage becomes known or reasonably discoverable-should be used. Id., 655, 660. The plaintiffs assert in their opposition brief that [i]t is clear from the factual record presented that the earliest that the Willenborgs were aware that there was a significant structural flaw in their home was the late summer of 2015." See Docket Entry No. 196, at 10. See also id., 17 ("The record on summary judgment suggests that the injury became manifest, at the earliest, in the summer of 2015 ..."). No loss manifested during the term of the Kemper policy, and, therefore, there is no coverage under that policy.
In an effort to avoid this result, the plaintiffs argue that the court should reject Dino, Soderburg, and other cases that have applied a manifestation trigger in the same or similar circumstances and, instead, apply a "continuous injury" trigger that would make the Kemper policy answerable to the plaintiffs’ claim. As did Judge Sferrazza in Soderburg, supra, 66 Conn.L.Rptr. 735, this court adopts Judge Farley’s thorough and well-reasoned decision in Dino, which concluded that the correct trigger is manifestation of the loss and damage, not a continuous injury trigger.
The plaintiffs also argue that Kemper’s suit limitation clause is ambiguous and can be interpreted to begin to run only when the claimed loss is complete, even if the loss occurred, or began to occur, years earlier. To the extent that this argument is different from the plaintiffs’ argument for a continuous trigger or multiple triggers to determine when the loss occurred, it relies on Strauss v. Chubb indemnity Ins. Co., 771 F.3d 1026 (7th Cir. 2014). Judge Farley has previously analyzed this argument and thoroughly and persuasively explained why the reasoning in Strauss is inapplicable when a manifestation trigger of coverage is applied. See Roy v. Covenant Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-16-6011084-S (April 27, 2018, Farley, J.). As Judge Farley stated: "Where the loss is understood to occur simultaneously with its manifestation, the progressive nature of the loss does not implicate the dilemma confronted by the policyholder in Strauss where the court held a loss can occur under circumstances where a reasonable policyholder would be unaware of it." Id.
Kemper’s suit limitation provision, like that in Roy, does not extend the limitation period until the alleged loss is complete. The latest possible manifestation date that would trigger coverage under the Kemper policy is July 2011, when the Kemper policy period ended. Any claim for loss that manifested prior to that date, and could, therefore, be a covered loss under the policy, would be barred by the suit limitation provision. As a result, even if the plaintiffs are correct that there is a factual dispute regarding when the loss in this instance manifested, it is not a material factual issue so as to preclude summary judgment. Kemper is entitled to summary judgment on the plaintiffs’ claim for breach of contract.
b. CUIPA and CUTPA Claims
Necessary to the plaintiffs’ CUIPA and CUTPA claims is that Kemper’s denial of coverage was in breach of Kemper’s contractual obligation to provide coverage for the plaintiffs’ loss. The granting of summary judgment on the plaintiffs’ contract claim, therefore, entitles Kemper to summary judgment on these statutory claims. See Dino v. Safeco Ins. Co. of America, supra, 66 Conn, L. Rptr. 668 ("Because the plaintiff’s CUTPA/CUIPA claims rest upon the premise that the defendants’ coverage determinations were unreasonable, and because the court has concluded there is no coverage under the policies issued by [the defendant-insurers], an essential element of the CUTPA/CUIPA claims against them is lacking").
II. General’s and Travelers’ Motions for Summary Judgment
The plaintiffs assert claims against both General and Travelers for a declaratory judgment that they are entitled to coverage under their respective policies and for breach of contract on the ground that General and Travelers have failed to provide coverage. They also assert claims for violation of CUIPA and CUTPA. The declaratory judgment and breach of contract claims are redundant for purposes of these motions for summary judgment because both turn on whether the insurance policies in question provide coverage for the plaintiffs’ alleged loss.
The General and Travelers policies are identical in all respects material to the pending motions, and, therefore, the motions of General and Travelers present identical issues.
a. Breach of Contract and Declaratory Judgment Claims
The plaintiffs seek recovery under provisions in these policies providing coverage for "collapse" of a building or any part of a building. Both policies define "collapse" as "an abrupt falling down or caving in ... with the result that the building or part of the building cannot be occupied for its current intended purpose." In the present case, the plaintiffs’ expert testified that the plaintiffs’ home was standing, did not cave in, did not fall down, and was not unsafe for the plaintiffs to live in, and there is no evidence in the record to the contrary.
In materially identical circumstances involving the same or similar policy language, courts have granted summary judgment to the insurer, holding that the plaintiffs could not establish that their homes had collapsed within the policy terms. See, e.g., Courteau v. Teachers Ins. Co., United States District Court, Docket No. 3:16-cv-00580 (MPS) (D.Conn. September 5, 2018); England v. Arnica Mutual Ins. Co., United States District Court, Docket No. 3:16-cv-1951 (MPS) (D.Conn. September 11, 2017); Fortin v. Ins. Co. of Pennsylvania, Superior Court, judicial district of Tolland, Docket No. CV-17-6011987-S (April 19, 2018, Farley, J.); Zalewa v. New London County Mutual Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-16-6010718-S (April 3, 2018, Farley, J.); Markland v. Homesite Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-16-6010323-S (March 6, 2018, Farley, J.); Perracchio v. Homesite Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-166010324-S (March 6, 2018, Farley, J.) (66 Conn.L.Rptr. 240); Jemiola v. Hartford Casualty Ins. Co., Superior Court, judicial district of Tolland, Docket No. CV-15-6008837-S (March 2, 2017, Cobb, J.). The plaintiffs’ counsel acknowledged at oral argument that the court would have to reject the reasoning in these cases, among others, to find a basis to deny Travelers’ and General’s motions for summary judgment. The court has reviewed these prior decisions, finds their reasoning thorough and persuasive, and adopts it here. General and Travelers are entitled to summary judgment on the plaintiffs’ contract and declaratory judgment claims.
b. CUIPA and CUTPA Claims
Necessary to the plaintiffs’ CUIPA and CUTPA claims is that the insurers’ denial of coverage was in breach of their contractual obligations to provide coverage for the plaintiffs’ loss. The granting of summary judgment on the plaintiffs’ contract and declaratory judgment claims requires the court to grant summary judgment on the statutory claims.
III. Utica’s Motion for Summary Judgment
The plaintiffs assert claims against Utica for a declaratory judgment that the plaintiffs’ alleged loss is covered by Utica’s insurance policies, for breach of contract based on Utica’s denial of coverage, and for CUIPA and CUTPA violations arising from denial of coverage.
Utica’s motion for summary judgment presents issues different from those involving the other insurers in this case. Utica argues that there is no coverage under its "all risk" policy for the plaintiffs’ alleged loss, both because the plaintiffs have not suffered a "direct physical loss" as necessary to trigger coverage, and, even if the plaintiffs have incurred such a loss, the alleged loss falls within an exclusion of coverage under the policy.
a. The Plaintiffs Have Alleged A Direct Physical Loss
Utica relies on two federal district court cases in arguing that there is no genuine issue of material fact as to whether plaintiffs have experienced a direct physical loss: Mazzarella v. Amica Mutual Ins. Co., United States District Court, Docket No. 3:17-cv-598 (SRU) (D.Conn. Feb. 8, 2018) and England v. Arnica Mutual Ins. Co., supra, United States District Court, Docket No. 3:16-cv-1951 (MPS). These cases do not support Utica’s argument.
In Mazzarella, Judge Underhill granted Amica’s motion to dismiss on the ground that the complaint contained only vague, general allegations of unspecified damage, which he ruled were insufficient to meet the plaintiffs’ burden to allege a direct physical loss. Mazzarella v. Arnica Mutual Ins. Co., supra, United States District Court, Docket No. 3:17-cv-598 (SRU). In England, Judge Shea rejected, on a motion to dismiss, the plaintiff’s argument that the chemical reaction in the concrete used in plaintiff’s basement walls was, itself, a direct physical loss. England v. Amica Mutual Ins. Co., supra, United States District Court, Docket No. 3:16-cv-1951 (MPS). Neither Mazzarella nor England supports Utica’s argument that undisputed facts establish that the plaintiffs did not suffer a direct physical loss.
In contrast to Mazzarella, the plaintiffs’ complaint here alleges the concrete frost walls of their home suffered "a series of horizontal and vertical cracks throughout," or "pattern cracking," which resulted in "a substantial impairment to their structural integrity." Pls.’ Am. Compl., 97, 99, 102. Those allegations are supported by the testimony of the plaintiffs’ expert. Therefore, the defendants have not demonstrated the absence of a material fact in dispute on this issue. Unlike the allegations found deficient in England, the plaintiffs here do not contend that the chemical reaction is the direct physical loss. Rather, they allege, and have pointed to evidence that supports, that cracking and the resulting impairment of the structural integrity of their frost walls is the direct physical loss. England supports, rather than rejects, the plaintiffs’ position by recognizing that "the resultant cracking within Ms. England’s walls likely qualifies as direct physical loss to the Property ..." (Internal quotation marks omitted.) England v. Amica Mutual Ins. Co., supra, United States District Court, Docket No. 3:16-cv-1951 (MPS).
b. Coverage Exclusions in Utica’s Policy Apply
However, Utica’s argument that Plaintiff’s alleged loss falls squarely within applicable policy exclusions is correct. The policy states in relevant part: "Settling, Cracking, Shrinking, Bulging or Expanding-We do not pay for loss caused by the settling, cracking, shrinking, bulging or expanding of a building structure ..." The policy also provides in relevant part: "We do not pay for loss which results from one or more of the following: ... a defect, a weakness, the inadequacy, a fault or unsoundness in materials used in construction or repair whether off or on the insured premises."
The plaintiffs’ complaint alleges a loss of the structural integrity of the plaintiffs’ frost walls caused by cracking, which resulted from the presence of a chemical compound introduced in the manufacturing of the concrete. Pls.’ Am. Compl., ¶¶ 97, 99-100. The deposition testimony of the plaintiffs’ expert is consistent with these allegations. Thus, the plaintiffs’ claim falls squarely within the plain terms of the policy’s exclusion for loss caused by cracking. See England v. Amica Mutual Ins. Co., supra, United States District Court, Docket No. 3:16-cv-1951 (MPS); Kim v. State Farm Fire & Casualty Co., 262 F.Supp.3d 1 (D.Conn. 2017), aff’d, United States Court of Appeals, Docket No. 17-2304-cv (2d Cir. Oct. 5, 2018); Markland v. Homesite Ins. Co., supra, Superior Court, Docket No. CV-16-6010323-S; Perracchio v. Homesite Ins. Co., supra, Superior Court, Docket No, CV-16-6010324-S .
The plaintiffs argue that the Utica exclusion of coverage for "cracking" does not apply because it excludes only losses caused by cracking and not losses consisting of cracking. The plaintiffs find support in Rudeen v. Allstate Ins. Co., United States District Court, Docket No. 3:16-cv-1827 (MPS) (D.Conn. March 20, 2018), where Judge Shea denied a motion to dismiss on the ground that there could be a plausible claim that a Utica policy excluded only losses "caused by" cracking, and not losses "consisting of cracking, while other insurers’ policies more clearly excluded both. Id. But Judge Shea’s later decision in Courteau, on a motion for summary judgment rather than a motion to dismiss, persuasively demonstrates that "[t]his distinction does not help the plaintiffs." Courteau v. Teachers Ins. Co., supra, United States District Court, Docket No. 3:16-cv-00580 (MPS). "[I]f the cracking itself is deemed the loss ... the undisputed evidence in the record shows that the loss ... result[ed] from ... a defect ... in materials used in construction ... and thus is excluded from coverage. On the other hand, if loss is accorded its ordinary meaning in this context, i.e., [t]he amount of financial detriment caused by an ... insured property’s damage, Garner, Black’s Law Dictionary, Ninth Ed., then the loss was caused by cracking and thus is excluded under the cracking exclusion ... In either case, the damage falls under the exclusions in the ... Policy." (Internal quotation marks omitted.) Id.
Although the plaintiffs appear to concede that their loss is within what they refer to as the "faulty materials" exclusion, they argue that they suffered an "ensuing loss" covered under the policy. The plaintiffs assert that it is "eminently reasonable" to consider the chemical reaction resulting from the defective material used in their frost walls "to be a separate resulting or ensuing loss" covered under the portion of the policy that states: "We do pay for an ensuing loss unless the ensuing loss itself is excluded."
Several decisions in "crumbling foundation" cases have rejected this argument, and this court adopts their reasoning. See, e.g., Mazzarella v. Amica Mutual Ins. Co., supra, United States District Court, Docket No. 3:17-cv-598 (SRU); Kim v. State Farm Fire & Casualty Co., supra, 262 F.Supp.3d 1; Markland v. Homesite Ins. Co., supra, Superior Court, Docket No. CV-166010323-S; Perracchio v. Homesite Ins. Co., supra, Superior Court, Docket No. CV-16-6010324-S (explaining that an ensuing loss must be distinct from the exclusion). "[C]ourts have sought to assure that the [ensuing loss] exception does not supersede the exclusion by disallowing coverage for ensuing loss directly related to the original excluded risk." Mazzarella v. Amica Mutual Ins. Co, supra, United States District Court, Docket No. 3:17-cv-598 (SRU).
The plaintiffs appear to argue that while the defect in the concrete used in their frost walls is excluded from coverage, the resulting damage to the walls is unrelated because it was caused by a chemical reaction that occurred when the defective concrete was exposed to water and air. But the chemical reaction is clearly alleged to be related to and caused by the presence of defective material in the concrete. Pls.’ Am. Compl., ¶ 99. This allegation is supported by the deposition testimony of the plaintiffs’ expert. The plaintiffs’ argument is what courts have warned against: an effort to supersede the exclusion for defective materials by finding coverage for a resulting loss directly related to the excluded risk. Moreover, the damage that the plaintiffs claim resulted from the defective concrete-the cracking of the concrete frost walls and resulting impairment of their structural integrity-is itself within a policy exclusion. The ensuing loss provision does not provide a basis for coverage.
Utica is entitled to summary judgment on the plaintiffs’ contract and declaratory judgment claims.
c. CUIPA and CUTPA Claims
Necessary to the plaintiffs’ CUIPA and CUTPA claims is, once again, that the insurer’s denial of coverage is in breach of its obligation under the subject insurance policy. Granting summary judgment on the plaintiffs’ contract and declaratory judgment claims requires the court to grant summary judgment on the statutory claims.
IV. Conclusion
For the foregoing reasons, the court grants summary judgment for all defendants.