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Courteau v. Teachers Insurance Co.

United States District Court, D. Connecticut

March 17, 2017

KENNETH T. COURTEAU and CHERYL A. COURTEAU Plaintiffs,
v.
TEACHERS INSURANCE COMPANY Defendant.

          RULING ON MOTION TO DISMISS

          Michael P. Shea, U.S.D.J.

         Plaintiffs Kenneth Courteau and Cheryl Courteau (the “Courteaus”) filed this action against their homeowner's insurance provider, Teachers Insurance Company (“Teachers”), for failure to pay for damages to the basement walls of their home caused by cracking concrete. (ECF No. 18.) The Courteaus bring claims of breach of contract (Count One), breach of the implied covenant of good faith and fair dealing (Count Two), and unfair and deceptive practices in violation of the Connecticut Unfair Insurance Practices Act, Conn. Gen. Stat. § 38a-816 et seq. (“CUIPA”) and the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110a et seq. (“CUTPA”) (Count Three). Teachers has moved to dismiss Counts Two and Three for failure to state claims on which relief can be granted. (ECF No. 24.) For the reasons set forth below, the motion is GRANTED as to Count Three and DENIED as to Count Two.

         I. Background

         According to the allegations in the first amended complaint, Teachers has insured the Courteaus' home in Somers, Connecticut since 2006. (ECF No. 18 ¶¶ 3-4.) The Courteaus have always timely and satisfactorily paid their insurance premiums. (Id. ¶ 5.)

         In October of 2015, the Courteaus discovered that the basement walls of their home had “a series of horizontal and vertical cracks throughout.” (Id. ¶ 6.) Upon investigation, the Courteaus learned that a chemical compound in the concrete was oxidizing and expanding, “breaking the bonds of the concrete internally” and causing “pattern cracking.” (Id. ¶¶ 7-9.) They also learned that the concrete was mostly likely supplied by the J.J. Mottes Concrete Company, which manufactured concrete for certain homes in the late 1980s and early 1990s. (Id. ¶¶ 8-9.) According to the Courteaus, it is only a matter of time before the basement walls fall in, and the entire home falls into the basement. (Id. ¶¶ 12-13.) The cost of repair is expected to be at least $250, 000. (Id. ¶ 20.)

         On October 19, 2015, the Courteaus notified Teachers of the problem, and on October 26, 2015, Teachers denied their claim for coverage. (Id. ¶¶ 14-16.) In its denial letter, Teachers stated:

         “Or [sic] investigation revealed the damage was caused by cracking in the foundation. We have reviewed your homeowner's policy and unfortunately coverage is excluded for this cause of loss.” (ECF No. 18-2 at 2.) The Courteaus' Homeowners Policy covered:

direct physical loss to covered property involving the collapse of a building or part of a building if the collapse was caused only by one or more of the following… 3) decay, but only if no ‘insured' knew of or could reasonably be expected to suspect the presence of such decay prior to the collapse… 6) the use of defective materials or methods in construction or repair if the collapse occurs during the course of construction or repair.

(ECF No. 18-1 at 13-14.) However, it did not cover: “loss caused by the settling, cracking, shrinking, bulging, or expanding of: a) bulkheads; b) ceilings; c) floors; d) footings; e) foundations; f) patios; g) paved areas; h) roofs; or i) walls.” (Id. at 23.) Teachers cited this latter provision in its denial letter. (ECF No. 18-2 at 2-3.)

         According to the Courteaus, Teachers participates in the American Association of Insurance Services, Inc. (“AAIS”), an organization aimed at collecting data about insurance claims and drafting policy provisions. (Id. ¶¶ 33-34.) Through participation in AAIS, Teachers had knowledge of many claims in northeastern Connecticut due to similar concrete decay, the strategies other insurers had used to deny claims, and cases such as Bacewicz v. NGM Ins. Co., 2010 WL 3023882 (D. Conn. Aug. 2, 2010), where plaintiffs were awarded judgment against the insurer for concrete decay based on “nearly identical” policy language. (Id. ¶¶ 36-38.) The Courteaus allege that in the denial letter, Teachers “intentionally cited policy exclusions wholly inapplicable to the plaintiffs' claim for coverage knowing full well that the plaintiffs, like most insureds, are unsophisticated with respect to the complex language contained in insurance policies.” (Id. ¶ 24.)

         The Courteaus filed this action in state court, and Teachers removed it to this court on April 12, 2016. (ECF No. 1.) On May 2, 2016, the Courteaus filed a three-count amended complaint (ECF No. 18), and on June 13, 2016, Teachers moved to dismiss the second and third counts, for breach of the implied covenant of good faith and fair dealing and violation of CUIPA and CUPTA. (ECF No. 24.)

         II. Legal Standard

         On a motion to dismiss, I take the plaintiffs' factual allegations in the complaint “to be true and [draw] all reasonable inferences in” their favor. Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation and quotation marks omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A court need not accept legal conclusions as true and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.

         III. ...


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