United States District Court, D. Connecticut
RULING ON DEFENDANTS' MOTION FOR SUMMARY
A. BOLDEN UNITED STATES DISTRICT JUDGE
case arises out of an insurance dispute between Plaintiffs
Steven and Karla Belz (the “Belzes”) and
Defendant Peerless Insurance Company
(“Peerless”). The Belzes experienced significant
damage to their basement walls in the form of widespread
cracking that threatened to compromise the structural
integrity of their home. The Belzes filed an insurance claim
with Peerless under the applicable homeowner's insurance
policy with respect to the cracks in the basement walls, and
Peerless denied coverage. Less than five months after the
denial, the Belzes initiated this action.
Belzes have stated three claims against Peerless: (1) a
breach of contract claim under the terms of the applicable
homeowner's insurance policy; (2) a breach of the implied
covenant of good faith and fair dealing; and (3) a violation
of the Connecticut Unfair Insurance Practices Act
(“CUIPA”) and the Connecticut Unfair Trade
Practices Act (“CUTPA”). In January 2015,
Peerless filed a motion for summary judgment with respect to
all three of the Belzes' remaining claims. For the
reasons stated below, Peerless' Motion for Summary
Judgment is DENIED.
STATEMENT OF FACTS
Belzes purchased their home in Vernon, Connecticut in 2001.
In advance of the purchase in 2001, the Belzes were made
aware of notable cracking in the basement walls through an
initial home inspection report prepared by Home Quality
Headquarters, Inc. (“HQH Report”). L.R. 56(a)(1)
¶ 17, ECF No. 53; L.R. 56(a)(2) ¶ 17, ECF No. 61.
The HQH Report mentioned numerous cracks in the basement
walls and recommended “monitoring for any significant
changes.” Id. at ¶ 18. Before finalizing
the purchase of the home, the Belzes hired an engineer, Hugh
Mullan, P.E., to conduct an independent evaluation of the
cracking in the basement walls. Id. at ¶ 6-8.
In a report dated August 2001, Mr. Mullan ultimately
concluded that the cracks did not threaten the structural
integrity of the home. L.R. 56(a)(2) at 23; Mullan Rep. 2,
ECF No. 53-6 (Exh. F). The Belzes began purchasing
homeowner's insurance through Peerless, a member of the
Liberty Mutual Group, in September 2004. L.R. 56(a)(1) ¶
3; L.R. 56(a)(2) ¶ 3.
2007, the Belzes installed “brightwall” wall
panels in their basement to cover the cracks in the walls.
Although there is no photographic evidence of the condition
of the basement walls at the time of the brightwall
installation, the Belzes insist that the cracks were no more
severe in 2007 than they were in 2001 when the home was
initially purchased. L.R. 56(a)(2) at 23. The Belzes further
explain that they understood the cracks to be a cosmetic
problem rather than a structural threat to the home, and that
they chose to install the brightwall because it “made
the ugly walls turn into white bright walls in the
basement.” Dep. of Stephen Belz 30, ECF No. 53-7 (Exh.
G). After the brightwall was installed, the cracks were no
longer visible, and the cracks continued to be obscured from
view until the brightwall was removed in or around April of
2013. As soon as the Belzes removed the brightwall in 2013,
they discovered that the cracking had progressed
substantially, to the point where the gaps in the wall were
so big that Mr. Belz could reportedly put his finger through
the wall. Id. at 55; Peerless Claims Notes 4, 7, ECF
No. 53-10 (Exh. J).
9, 2013, the Belzes filed an insurance claim with Peerless
with respect to the cracks in the basement walls. The
insurance policy in place at that time states the following:
8. Collapse. We insure 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:
a. Perils Insured Against in COVERAGE C - PERSONAL PROPERTY.
These perils apply to covered buildings and personal property
for loss insured by this additional coverage;
b. Hidden decay;
c. Hidden insect or vermin damage;
d. Weight of contents, equipment, animals or people;
e. Weight of rain which collects on a roof; or
f. Use of defective material or methods in construction,
remodeling or renovation if the collapse occurs during the
course of the construction, remodeling or renovation.
Insurance Contract 58, ECF No. 53-1 (Exh. A). The term
“collapse” is not explicitly defined in the
the same “Collapse” provision, the insurance
policy also excludes the following from coverage:
Loss to an awning, fence, patio, pavement, swimming pool,
underground pipe, flue, drain, cesspool, septic tank,
foundation, retaining wall, bulkhead, pier, wharf or dock is
not included under items b., c., d., e., and f. unless the
loss is a direct result of the collapse of a building.
Id. The terms “foundation” and
“retaining walls” are not explicitly defined in
the contract. Additional exclusions are listed under
“SECTION I - EXCLUSIONS, ” which states in
2. We do not insure for loss to property described in
Coverages A and B caused by any of the following. However,
any ensuing loss to property described in Coverages A and B