United States District Court, D. Connecticut
RULING ON CROSS MOTIONS FOR SUMMARY JUDGMENT AND
MOTION TO BIFURCATE
W. EGINTON, SENIOR U.S. DISTRICT JUDGE
action, plaintiff Thurston Foods, Inc., seeks to recover
benefits under a commercial property insurance policy issued
by defendant Wausau Business Insurance Company. Plaintiff has
alleged claims for breach of contract, bad faith, and
violation of the Connecticut Unfair Insurance Practices Act
(“CUIPA”) and the Connecticut Unfair Trade
Practices Act (“CUTPA”).
has moved for summary judgment, and plaintiff has moved for
partial summary judgment. Defendant has also filed a motion
to bifurcate the discovery and trial of plaintiff's
breach of contract and extra-contractual claims alleging bad
faith and CUIPA/CUTPA violation. For the following reasons,
plaintiff's motion for partial summary judgment will be
denied; defendant's motion for summary judgment will be
granted in part and denied in part; and defendant's
motion for bifurcation will be denied without prejudice.
parties have submitted statements of fact with supporting
affidavits and exhibits. According to the parties'
submissions, the following facts are not in dispute.
is a wholly owned subsidiary of the Liberty Mutual Insurance
Company or the Liberty Mutual Group of Insurance Companies.
Plaintiff is a food distributor with a warehouse located in
Wallingford, Connecticut. At the time relevant to this
action, Patrick Thurston handled plaintiffs property
insurance matters. Defendant issued plaintiff an insurance
policy effective from August 1, 2010, to August 1, 2011, to
insure the warehouse.
warehouse was constructed in 1990, and contained an
industrial freezer. Plaintiff installed and utilized a
passive ventilation system under the freezer floor. The
passive ventilation system consists of twenty-five, six inch
diameter PVC pipes spaced four-feet apart placed in a crushed
stone layer that is open to the air at the front and back
foundation walls. In 2003, plaintiff constructed an addition
to the freezer and expanded the passive ventilation system to
include the area under the addition.
commercial property insurance policy (the "Policy")
provided insurance subject to provisions, terms, conditions,
and exclusions. The Policy contained a $5, 000 deductible
that applied to all claims arising under its
Policy provides, in part: "We will pay for direct
physical loss or damage to Covered Property at the premises
described in the Declarations caused by or resulting from any
Covered Cause of Loss." The Policy specifies that it
covers "loss or damage commencing ... during the policy
period" of August 1, 2010 through August 1, 2011. In the
"Event of Loss or Damage, " the Policy imposes a
duty to: "Take all reasonable steps to protect the
Covered Property from further damage
to the Policy section entitled "Covered Causes of
Loss" under the "Causes of Loss - Special Form,
" the Policy provides that "[w]hen Special is shown
in the Declarations, Covered Causes of Loss means Risks of
Direct Physical Loss unless the loss is: 1. Excluded in
Section B., Exclusions; or2. Limited in Section C,
B.1.b.of "Exclusions" provides, in part:
We will not pay for loss or damage caused directly or
indirectly by any of the following. Such loss or damage is
excluded regardless of any other cause or event that
contributes concurrently or in any sequence to the loss.....
(b)(4) Earth sinking (other than sinkhole collapse) rising or
shifting including soil conditions which cause settling,
cracking or other disarrangement of foundations or other
parts of realty. Soil conditions include contraction,
expansion, freezing, thawing, erosion, improperly compacted
soil and the action of water under the ground surface.
B.2.d.4. of "Exclusions" provides that defendant
"will not pay for loss or damage caused by or resulting
from ... settling, cracking, shrinking or expansion...."
Policy provides that defendant "will determine the value
of Covered Property in the event of loss or damage ... [a]t
actual cash value as of the time of loss or damage"
subject to certain exceptions enumerated further in Policy.
The Policy specifies that "Replacement Cost (without
deduction for depreciation) replaces Actual Cash Value in the
Valuation Loss Condition of this Coverage Form."
Further, the Policy provides that an insured "may make a
claim for loss or damage covered by this insurance on an
actual cash value basis instead of on a replacement cost
basis." The Policy states that defendant "will not
pay on a replacement cost basis for any loss or damage until
the lost or damaged property is repaired or replaced, "
and '[u]nless the repairs or replacement are made as soon
as reasonably possible after the loss or damage."
Policy covers "Extra Expense, " defined as
"expenses you incur during the 'period of
restoration' that you would not have incurred if there
has been no direct physical loss or damage to property caused
by or resulting from a Covered Cause of Loss, " as
Extra Expense Coverage is provided at the premises ... only
if the declarations show that Business Income Coverage
applies at the premises .... We will pay Extra Expense (other
than the expense to repair or replace property) to: (1) Avoid
or minimize the suspension of business and to continue
operations at the described premises or at a replacement
premises or temporary location, including relocation expenses
and costs to equip and operate the replacement location or
temporary location. (2) Minimize the "suspension"
of business if you cannot continue "operations". We
will also pay Extra Expense to repair or replace property,
but only to the extent it reduces the amount of loss that
otherwise would have been payable under this Coverage Form.
to the Policy terms, "Extra Expense" will be
determined based on:
(1) All expenses that exceed the normal operating expenses
that would have been incurred by 'operations' during
the "period of restoration" if no direct physical
loss or damage had occurred. We will deduct from the total of
such expenses: (a) The salvage value that remains of any
property bought for temporary use during the "period of
restoration, " once "operations" are resumed;
and (b) Any Extra Expense that is paid for by other
insurance, except for insurance that is written subject to
the same plan, terms, conditions and provisions as this
(2) Necessary expenses that reduce the Business Income Loss
that otherwise would have been incurred.
Snow Accumulation and Interior Damage
January 2011, snow and ice accumulated on the roof of
plaintiffs' building. In early 2011, Thurston noticed
water leaking into the interior of its building.
was advised by Stahlman Engineering to remove the snow
because its weight could cause structural damage. The snow
was removed from the roof and then deposited along the
perimeter of the building.
February 16, 2011, Patrick Thurston spoke by telephone to
Karolina Araszkiewicz, then a senior property adjuster,
regarding its claims arising from snow removal, damage to the
warehouse roof, and damage to the interior offices. During
that call, he indicated that Stahlman Engineering had
suggested that the snow be cleared off of the roof due to its
weight; that plaintiff had paid a contractor and used
internal labor to clear the snow off the roof; and that
plaintiffs claim was reported late because he had been
inundated with workers compensation, auto, and other
insurance claims. In his deposition, Thurston later testified
that notice was delayed for the additional reason that
plaintiff was "taking care of the roof "and being
"proactive to stop the leaking, clear the snow
first" prior to making a claim.
February 17, 2011, Araszkiewicz inspected the claimed damage
at plaintiffs facility. According to defendant, she did not
observe any damage to the roof except for a possible
nine-square-foot area near the gutter line over the
warehouse. However, she concluded that approximately
244-square feet of ceiling tiles required replacement due to
staining; 62-square feet of dry wall needed to be replaced;
and 288-square feet of drywall needed painting.
letter dated February 23, 2011, defendant acknowledged
receipt of the snow load claim and provided a summary of the
damage according to Araszkiewicz's observation. By letter
dated March 15, 2011, defendant advised plaintiff that the
snow load claim damages did not exceed the $5, 000
deductible. In an email dated March 30, 2011, plaintiffs
broker, Cecile May of USI New England ("USI"),
informed defendant that there was ...