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Justin CYR v. CSAA Fire & Casualty Insurance Co.

United States District Court, D. Connecticut

March 20, 2017

JUSTYN CYR and SHEILA CYR, Plaintiffs,
v.
CSAA FIRE & CASUALTY INSURANCE COMPANY, Defendant.

          MEMORANDUM OF DECISION DENYING DEFENDANTS' MOTION TO DISMISS [DKT. 16]

          Hon. Vanessa L. Bryant, United States District Judge

         I. Introduction

         The Plaintiffs, Justyn Cyr and Sheila Cyr (the “Cyrs”), bring this action in a three-count complaint against Defendant CSAA Fire & Casualty Insurance Company (“CSAA”). The Plaintiffs allege breach of contract, breach of the implied covenant of good faith and fair dealing, and violations of the Connecticut Unfair Insurance Practices Act (“CUIPA”) and Unfair Trade Practices Act (“CUTPA”), as a result of CSAA's decision to decline coverage for damage to the basement walls of Plaintiffs' home (the “Property”) under a homeowners insurance policy (the “Policy”). CSAA has moved to dismiss Counts Two and Three of the Complaint. [Dkt. 16]. Plaintiffs oppose the motion. [Dkt. 21]. For the reasons that follow, Defendant's Motion to Dismiss is DENIED.

         II. Factual Background

         The Cyrs own and reside at 35 Old Kent Road South, Tolland, CT 06084. [Dkt. 1-1 (“Compl.”) ¶ 1]. CSAA provided homeowners insurance to the Cyrs for this residence. Id. at ¶ 3. Over time, the Cyrs observed visible cracking patterns in the basement walls if their home. Id. at ¶ 5. Having seen news reports regarding deteriorating concrete issues, the Cyrs engaged a structural engineer to inspect their basement. Id. at ¶ 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.

         In October 2015, the Cyrs 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 Cyrs, citing contrary policy provisions to deny the claim on October 23, 2015. Id. at ¶¶ 12-13.

         In support of their assertion that this denial was made in bad faith, the Plaintiffs allege, “[T]he Defendant in its discretion, unreasonably and in bad faith, sought out other policy provisions 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.” [Compl. ¶ 16]. The Complaint provided no additional details indicating why the Cyrs believed that their denial was unreasonable or made in bad faith.

         Plaintiffs allege Defendant is aware of “the numerous claims and lawsuits that have arisen in this section of Connecticut” regarding deteriorating concrete, through Defendant's participation in the Insurance Services Office, Inc. (“ISO”), which collects data regarding insurance claims. Id. at ¶¶ 19, 21. Based on the aforementioned information received from ISO, the Plaintiffs contend that Defendant has attempted to deny coverage for claims such as the Plaintiffs' based on other purported exclusions, despite provisions within the policy that provide coverage for chemical reaction and collapse, to which there is no chemical reaction exclusion. Id. at ¶ 22. The Defendant provided a false and misleading denial of coverage that was contrary to other sections of its policy that provide coverage for chemical reaction and collapse. Id. at ¶ 23. Nowhere in the policy does it exclude coverage for chemical reaction. Id.

         Defendant has “regularly denied claims in similar manners or on similar grounds or other grounds, ” in a “business practice intended to put the Plaintiffs at a disadvantage.” Id. at ¶¶ 24-25. Plaintiffs assert Defendant's denial of Plaintiffs' claim contravenes the terms of the policy, is “oppressive, unethical, immoral, and unscrupulous, ” and directly and proximately caused Plaintiffs to suffer “losses and damages they are rightfully owed under the homeowner's insurance policy” as well as litigation expenses and loss of interest. Id. at ¶¶ 26-27.

         Plaintiffs brought this action in the Superior Court of Connecticut on December 14, 2015, alleging breach of contract, breach of the covenant of good faith and fair dealing, and violation of Connecticut's Unfair Trade Practices Act (“CUTPA”). [Dkt. 1-1]. The case was removed to this Court on January 20, 2016. [Dkt. 1].

         III. Legal Standard

         To survive a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), the complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         The Court must “accept[] all factual allegations as true and draw[] all reasonable inferences in favor of the plaintiff” when deciding a motion to dismiss. Litwin v. Blackstone Grp., L.P., 634 F.3d 706, 715 (2d Cir. 2011). A court may, however, “choose to begin by identifying pleadings that, because they are no more than conclusions, are ...


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