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Sirois v. USAA Casualty Insurance Co.

United States District Court, D. Connecticut

August 29, 2017

MICHAEL M. SIROIS and ALICIA M. SIROIS Plaintiffs,
v.
USAA CASUALTY INSURANCE COMPANY Defendant.

          RULING ON MOTION TO DISMISS

          Michael P. Shea, U.S.D.J.

         Plaintiffs Michael L. Sirois and Alicia M. Sirois (collectively, “Plaintiffs”) filed this action in state court against their homeowner's insurance provider, USAA Casualty Insurance Company (“USAA”), for failure to pay for damages to the basement walls of their home caused by cracking and deterioration in the concrete. USAA removed the case to this court on July 13, 2016. (ECF No. 1.) On October 21, 2016, the plaintiffs filed an amended complaint, bringing claims of breach of contract (Count One) 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 Two). (ECF No. 23.) On November 11, 2016, USAA moved to dismiss the breach of contract claim under Federal Rule of Civil Procedure 12(b)(6) on the grounds that the insurance policy at issue did not cover the alleged damage, and the CUIPA/CUTPA claim on the grounds that it could not be maintained in the absence of a breach of contract claim, or, in the alternative, that it failed to state a claim under CUIPA. (ECF No. 24.) The parties presented oral argument on August 24, 2017. For the reasons set forth below, USAA's motion is DENIED.

         I. Factual Allegations and Pertinent Policy Language

         According to the allegations in the amended complaint, USAA has insured Plaintiffs' home in Tolland, Connecticut since Plaintiffs bought it in 2010. (ECF No. 23 ¶¶ 3-4.) Plaintiffs have always timely and satisfactorily paid their insurance premiums. (Id. ¶ 5.) Plaintiffs' insurance policy was automatically renewed each year. (Id.)

         In April of 2016, Plaintiffs noticed that the basement walls of their home had “a series of horizontal and vertical cracks throughout.” (Id. ¶ 6.) Upon investigation, they learned that a chemical compound in the concrete was oxidizing and expanding, “breaking the bonds of the concrete internally and reducing it to rubble.” (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.) Plaintiffs' basement walls have begun to show signs of “structural[] fail[ure]”: “bowing, bulging, jacking, shifting, and other instances of differential inward and upward motion.” (Id. ¶¶ 13-14.) According to Plaintiffs, it is only a matter of time before the basement walls fall in due to pressure from the surrounding soil and the entire home falls into the basement. (Id. ¶¶ 11-12.) Plaintiffs expect the cost of repair to be at least $200, 000. (Id. ¶ 28.)

         On April 19, 2016, Plaintiffs notified USAA of the problem, and on June 1, 2016, USAA denied Plaintiffs' claim for coverage. (Id. ¶¶ 21-23.) In its denial letter, attached to the amended complaint and incorporated by reference, USAA stated, “Your claim for the cost to repair the cracking to the basement walls and floor caused by the defective concrete materials used in the construction of your home is not covered because your policy does not cover this type of loss.” (ECF No. 23-2.) The letter continued, “[t]he specific policy language, which is the basis for the denial, is located on: Page 18, Section 1, LOSSES WE DO NOT COVER, LOSSES WE DO NOT COVER UNDER DWELLING PROTECTION, OTHER STRUCTURES PROTECTION AND PERSONAL PROPERTY PROTECTION:, 2.c. (3).” (Id.)

         In their amended complaint, Plaintiffs allege that the homeowner's policy issued by USAA covers “‘collapse' of a building or any part of a building” when such collapse is caused by “(b) Decay that is hidden from view; . . . or (f) Use of defective materials or methods in construction, remodeling or renovation.” (ECF No. 23 ¶ 24.) Plaintiffs attached to their amended complaint and incorporated by reference their most recent USAA Homeowners Policy, in effect from June 30, 2016 to June 30, 2017 (the “2016-2017 Policy”). (ECF No. 23-1.) In the Definitions section, as amended, [1] “collapse” is defined as, “a. A sudden falling or caving in; or b. A sudden breaking apart or deformation such that the building or part of a building is in imminent peril of falling or caving in and is not fit for its intended use.” (Id. at 21, 57.)

         The 2016-2017 Policy includes portions titled (1) “Section I - Property We Cover, ” (including “Dwelling Protection, ” “Other Structures Protection, ” “Personal Property Protection, ” and “Loss of Use Protection”); (2) “Additional Coverages”; (3) “Section I - Losses We Cover”; (4) “Section I - Losses We Do Not Cover”; and (5) “Section I - Conditions.” (ECF No. 1 at 23, 27, 33, 35, and 38.) Under “Quick Reference, ” these are all listed under “Section I”. (Id. at 19.)

         “Additional Coverages” is a separately headed portion of the 2016-2017 Policy. (Id. at 27.) Under this portion, the 2016-2017 Policy specifies:

8. “Collapse”. For an entire building or any part of a building covered by this insurance we insure for direct physical loss to covered property involving “collapse” of a building or any part of a building only when the “collapse” is caused by one or more of the following:
a. “Named peril(s)” apply to covered buildings and personal property for loss insured by this additional coverage.
b. Decay that is hidden from view, meaning damage that is unknown prior to “collapse” or that does not result from a failure to reasonably maintain the property; c. Insect or vermin damage that is hidden from view . . . . . .
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.
Loss to an awning… foundation, retaining wall… 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. at 30.)

         Under, “Section I - Losses We Do Not Cover, ” the 2016-2017 Policy states, “Losses We Do Not Cover Under Dwelling Protection and Other Structures Protection.” (Id. at 35.) Below this, the 2016-2017 Policy, as amended, provides:

1. Unless otherwise stated in 3. below we do not insure for damage consisting of or caused directly or indirectly by any of the following… …
f. Wear and tear, marring, deterioration; g. latent defect, inherent vice, or any quality of the property that causes it to damage or destroy itself; h. Smog, rust, electrolysis or other corrosion;
k. Settling, cracking, shrinking, bulging or expansion of pavements, patios, foundations, walls, floors, ...

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