United States District Court, D. Connecticut
LYNEE LISTON-SMITH, et al. Plaintiff,
CSAA FIRE & CASUALTY INSURANCE COMPANY Defendants.
RULING RE: MOTION TO DISMISS (DOC. NO. 12)
C. Hall United States District Judge
plaintiffs, Lynne Liston-Smith and John Smith (collectively
“the plaintiffs”), filed this action against
their homeowner's insurance provider, defendant CSAA Fire
& Casualty Insurance Company (“CSAA”),
because CSAA failed to pay for damage to the plaintiffs'
basement walls that they allege is covered under their
homeowner's insurance policy. The Complaint (Doc. No.
1-1) contains three counts. The First Count alleges breach of
contract; the Second Count alleges a breach of the implied
covenant of good faith and fair dealing; and the Third Count
alleges that CSAA's claim settlement practices violate
the Connecticut Unfair Insurance Practices Act, section 816
of title 38A of the Connecticut General Statutes
(“CUIPA”), and the Connecticut Unfair Trade
Practices Act, section 110b of title 42 of the Connecticut
General Statutes (“CUTPA”).
4, 2016, CSAA filed a Motion to Dismiss (Doc. No. 12) Counts
Two and Three of the Complaint, arguing that those two counts
are legally insufficient and fail to state a claim. More
specifically, with regard to Count Two, CSAA argues that the
dispute over whether the claim is covered does not, by
itself, demonstrate that it acted in bad faith, and that the
correspondence, subsequently withdrawn, threatening to cancel
the insurance was unrelated to the claim dispute. Defs. Mot.
At 1-2. CSAA argues that Count Three fails because the
plaintiffs have not alleged sufficient conduct to show a
general business practice of unfairly settling claims.
Id. at 2.
following reasons, the court GRANTS in part and DENIES in
part CSAA's Motion to Dismiss.
considering a motion to dismiss, the court must accept all of
the allegations contained within the Complaint as true and
make all reasonable inferences in favor of the non-moving
party. In re NYSE Specialists Sec. Litig., 503 F.3d
89, 95 (2d Cir. 2007).
plaintiffs Lynne Liston-Smith and John Smith own and reside
at their home in Toland, Ct. Compl. at ¶ 1. The
plaintiffs have at all relevant times insured their home
through CSAA. Id. at ¶ 3. Over time, they
noticed cracks in the concrete walls of their basement and
decided to hire a structural engineer to inspect those
cracks. Id. at ¶¶ 5-6. The engineer
informed them that the cracks were due to a chemical reaction
in the concrete that would ultimately render the walls
unstable and recommended that the concrete be replaced.
Id. at ¶ 7.
September 5, 2015, the plaintiffs made a claim to CSAA for
coverage of the damages caused by the chemical reaction based
on the report made by the structural engineer. Id.
at ¶ 8. The claim was based on the terms of the
insurance coverage, which specifically stated that one of the
“Perils Insured Against” was the “risk of
direct physical loss to property.” Id. at
¶ 9. Additionally, the homeowner's insurance policy
covers “collapse, ” which the plaintiffs contend
includes progressive deterioration of the concrete in the
basement walls. Id. at ¶ 11. CSAA disagreed
with the plaintiffs, citing contrary policy provisions to
deny the claim on October 12, 2015. Id. at
October 26, 2015, CSAA informed the plaintiffs that it was
planning on cancelling their insurance coverage if the
plaintiffs did not repair their foundation by February 15,
2016. Id. at ¶ 17. CSAA sent this letter
despite an order from the Commissioner of the Department of
Insurance specifically prohibiting policy cancellations due
to the deterioration of concrete in houses like the
plaintiffs. Id. at ¶ 18. Ultimately, after
counsel and public officials applied pressure, CSAA reversed
its position and withdrew its plan to cancel the plaintiffs
insurance. Id. at ¶ 19.
the plaintiffs claim that CSAA violated CUTPA and CUIPA
through its participation in an insurance data aggregation
organization. Id. at ¶¶ 22, 28-29. CSAA is
a member of the Insurance Services Office, Inc.
(“ISO”), an organization that collects and shares
policy language and claim data between most insurance
companies. Id. at ¶ 22. The plaintiffs claim
that CSAA, through ISO, has a general business practice of
denying claims like the plaintiffs' despite a lack of
justifying language in their policy. Id. at
survive a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), the plaintiff must plead a legally
cognizable claim through allegations that, if true, would
entitle the plaintiff to relief. See Bell Atlantic v.
Twombly, 550 U.S. 544, 557 (2007). When considering a
motion to dismiss pursuant to Rule 12(b)(6), the court takes
the factual allegations made within the Complaint as true,
Hemi Grp., LLC v. City of New York, 559 U.S. 1, 5
(2010), and draws all reasonable inferences in the
plaintiff's favor, Fulton v. Goord, 591 F.3d 37,
43 (2d Cir. 2009). However, the court's acceptance of the
allegations in a complaint is limited to allegations of
facts; the court is “not bound to accept as true a
legal conclusion couched as a factual allegation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 555).
the court must determine whether the plaintiff has pled
sufficient “factual content [to] allow the court to
draw the reasonable inference that the defendant is liable
for the misconduct caused.” Id. The notice
pleading standard adopted in Rule 8 does not require the
Complaint to contain “detailed factual allegations,
” but it must have more than ...