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Valls v. Allstate Insurance Co.

United States District Court, D. Connecticut

September 27, 2017



          Victor A. Bolden United States District Judge.

         This is one of many “crumbling concrete” cases currently pending in the District of Connecticut. William and Christine Valls (“Vallses”) originally filed this action in state court, seeking a declaratory judgment against Allstate Insurance Company (“Allstate”). After Defendant removed to this Court, Plaintiffs amended their Complaint to include four counts: (1) a declaratory judgment that Plaintiffs are entitled to coverage for damage to their home; (2) a breach of contract claim for Defendant's denial of coverage; (3) breach of the implied covenant of good faith and fair dealing claim in relation to Defendant's handling of the insurance claim; and (4) unfair and deceptive practices claims under the Connecticut Unfair Insurance Practices Act (CUIPA) and the Connecticut Unfair Trade Practices Act (CUTPA).

         Defendant now moves to dismiss the Amended Complaint in its entirety. The motion will be GRANTED for the reasons stated below.

         I. Factual and Procedural Background

         In 1998, four years after it was built, the Vallses bought their home on 67 Zeya Drive in Conventry, Connecticut. Amend. Compl., ECF No. 21 at ¶ 5. Since 2002, Allstate Insurance Company has provided them with a Homeowners Policy and they, in turn, paid the premiums necessary to maintain this insurance coverage. Id. at ¶ 6-7.

         The policy at issue provided for coverage of “sudden and accidental direct physical loss” to a covered building or part of a covered building. Deluxe Home Policy Declarations, Amend. Compl., Ex. A, ECF No. 21-1 at 6. However, the policy also limited that coverage with several exclusions or exceptions. It did not cover losses caused by the “wear and tear, aging, marring, scratching, deterioration, inherent vice or latent defect.” Id. at 7. The policy excluded coverage for “faulty, inadequate or defective . . . materials used in repair, construction, renovation or remodeling, ” as well as damage caused by the “freezing, thawing, pressure, or weight of water or ice. Id. at 8. The policy also did not cover collapse, except as defined in the “Additional Protection” section. Id. at 8. This additional collapse provision provides coverage for the “entire collapse of a covered building structure” or part of a structure, provided it is “sudden and accidental physical loss” and the result of one of several enumerated causes. Id. at 15.

         In October 2015, however, the Vallses began to notice a “series of horizontal and vertical cracks” throughout the basement walls of the property. Amend. Compl. at ¶ 9. After consulting with contractors and engineers, they discovered that the concrete had cracked due to a chemical compound in the concrete that had begun to rust, expand, and subsequently breakdown. Id. at ¶ 11-12. “At some point between the date on which the basement walls were poured and the month of October, 2015, ” Plaintiffs allege, “the basement walls suffered a substantial impairment to their structural integrity” and were now at danger of falling in. Id. at § 14. Plaintiffs allege that there is no way to reverse the deterioration and that, when it continues, the entire home will eventually fall into the basement. Id. at 13, 16.

         Plaintiffs informed Allstate and Allstate dispatched an adjuster and engineer. Allstate, however, did not originally issue a decision in the matter and the Vallses filed for a declaratory judgment in Connecticut Superior Court. See generally Notice of Removal, ECF No. 1. Allstate removed the case to this Court. Id.

         On August 1, 2016, Allstate denied the Vallses' claim and stated that “there is no coverage for your claimed loss under any Allstate policy.” Amend. Compl., Ex. B at 2. Allstate noted that they had sent a structural engineer to the property, who identified the presence of pyrrhotite, a material that expands when it reacts with water and air. Id. The engineer also determined that the deterioration was minor at that time. Id. Allstate stated that the “foundational cracking at the Property is not ‘sudden and accidental direct physical loss” and concluded that the property did not “collapse” within the scope of protection. Id. at 4.

         After the denial, the Vallses amended their complaint. They now allege four claims. First, they still seek a declaratory judgment as to Allstate's liability under the Homeowners Policy for collapse of the home. Second, they also now allege that Allstate breached their contract when they denied them coverage. Third, they further allege that Allstate violated the implied covenants of good faith and fair dealing, which contracting parties owe to each other. Finally, they allege that Allstate's participation in an industry-wide group violates two Connecticut statutes, Connecticut Unfair Insurance Practices Act (CUTPA), Conn. Gen. State. § 42-110a, et seq., and the Connecticut Unfair Trade Practices Act (CUIPA). Conn. Gen. Stat. § 38a-816(6)(F).

         Allstate now moves to dismiss the Complaint in its entirety for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).

         II. Standard of Review

         Federal Rule of Civil Procedure 12(b)(6) requires the dismissal of any claim that fails “to state a claim upon which relief can be granted.” In reviewing a complaint under Rule 12(b)(6), the court applies “a ‘plausibility standard'” guided by “two working principles.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). First, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Second, to survive a motion to dismiss, the complaint must state a plausible claim for relief. Id. at 679. “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. at 678. Instead, a plaintiff must allege facts that nudge[] their claims across the line from conceivable to plausible . . . .” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Determining whether the complaint states a plausible claim for relief is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Iqbal, 556 U.S. at 679).

         When evaluating a 12(b)(6) motion, the court must accept all factual allegations in the complaint as true and draw all possible inferences from those allegations in favor of the plaintiff. See York v. Ass'n of the Bar of the City of New York, 286 F.3d 122, 125 (2d Cir.), cert. denied, 537 U.S. 1089 (2002). The proper consideration is not whether the plaintiff ultimately will prevail, but whether the plaintiff has stated a claim upon which relief may be granted such that he should be entitled to offer evidence to support his claim. See Id. (citation omitted). Courts considering motions to dismiss under Rule 12(b)(6) generally “must limit [their] analysis to the four corners of the complaint, ” though they may also consider documents that are “incorporated in the complaint by reference.” Kermanshah v. Kermanshah, 580 F.Supp.2d 247, 258 (S.D.N.Y. 2008).

         III. Discussion

         Allstate's putative liability hinges on whether or not they breached the contract: that is, whether the loss from the Homeowners Policy issued to the Vallses covers the deteriorating concrete in their basement. Because we determine that Allstate is not in breach, we dismiss that claim along with the claims for breach of implied covenants and the claims under CUTPA and CUIPA.

         A. Breach of Contract

         We begin with the breach of contract claim - Count II in the Amended Complaint - as its resolution will inform the resolution of the other claims alleged. As pleaded, the Vallses allege that Allstate breached their contractual obligation by denying coverage, despite policy language specifying that “the entire collapse of a building ...

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