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Jang v. Liberty Mutual Fire Insurance Co.

United States District Court, D. Connecticut

February 22, 2018



          Joan Glazer Margolis, United States Magistrate Judge.

         On August 19, 2015, plaintiffs James M. Jang and Anna S. Park commenced this action against defendant Liberty Mutual Fire Insurance Company [“defendant” or “Liberty”](Dkt. #1), which complaint was superseded by an Amended Complaint filed on September 9, 2015 (Dkt. #10) in which plaintiffs allege coverage for damages sustained from their home's crumbling foundation under the Homeowners Policy issued by defendant. Specifically, plaintiffs assert the following three counts: breach of contract (Count One); breach of implied covenant of good faith and fair dealing (Count Two); and unfair and deceptive practices in violation of the Connecticut Unfair Insurance Practices Act [“CUIPA”] and the Connecticut Unfair Trade Practices Act [“CUTPA”](Count Three). (Id.). On December 18, 2015, defendant filed its answer and affirmative defenses. (Dkt. #18).

         On August 15, 2017, defendant filed the pending Motion for Summary Judgment (Dkt. #34), with brief (Dkt. #35), and Local Rule 56(a)1 Statement of Material Facts and exhibits (Dkt. #36)[1] in support. On September 5, 2017, plaintiffs filed their brief in opposition, with Local Rule 56(a)2 Statement of Material Facts and exhibits. (Dkt. #37).[2] Defendant filed its reply brief with exhibits attached on September 19, 2017. (Dkt. #38).[3] Two months later, on November 27, 2017, Senior United States District Judge Janet Bond Arterton referred the pending motion to this Magistrate Judge. (Dkt. #39).

         For the reasons set forth below, defendant's Motion for Summary Judgment (Dkt. #34) is granted in part and denied in part.



         Plaintiffs' property at 56 Stonefield Trail, South Windsor, Connecticut was constructed in 1985, and plaintiffs purchased the property in June 2007. (Pls.' Local R. 56(a)1 Stmt ¶ 3; Def.'s Local R. 56(a)2 Stmt ¶ 3; see Dkt. #10, Count I, ¶ 4 at 2). Liberty first insured plaintiffs' property on June 22, 2007 under Policy Number H32-218-137330-40 [hereinafter the “Policy”](Pls.' Local R. 56(a)1 Stmt ¶¶ 1-2; Def.'s Local R. 56(a)2 Stmt ¶¶ 1-2; see Dkt. #36, Exhs. A-B; see also Pls.' Local R. 56(a)1 Stmt ¶ 26; Def.'s Local R. 56(a)2 Stmt ¶ 26; see Dkt. #36, Exh. L (the initial Liberty Policy incepted on June 22, 2007)). Jang first learned of foundation problems when he was trying to sell his house in early 2015 (see Dkt. #36, Exh. H, at 1), 5 and he first reported the claim to Liberty on August 11, 2015. (Pls.' Local R. 56(a)1 Stmt ¶ 4; Def.'s Local R. 56(a)2 Stmt ¶ 4; see Dkt. #36, Exh. B, ¶ 6). Jang had already consulted with his attorneys prior to reporting his claim. (Pls.' Local R. 56(a)1 Stmt ¶ 5; Def.'s Local R. 56(a)2 Stmt ¶ 5; see Dkt. #36, Exh. C at 42-43). Jang did not mention his attorneys or similar lawsuits brought by his attorneys pertaining to homes in the general vicinity of his home. (Pls.' Local R. 56(a)1 Stmt ¶ 6; Def.'s Local R. 56(a)2 Stmt ¶ 6; see Dkt. #36, Exh. C at 45-46, 63). Liberty denied the claim by way of correspondence dated August 11, 2015. (Pls.' Local R. 56(a)1 Stmt ¶ 7; Def.'s Local R. 56(a)2 Stmt ¶ 7; see Dkt. #36, Exh. D).[6]

         B. FOUNDATION

         In a May 11, 2007 home inspection report by Michael Cunningham of Great ProSpects, LLC, Cunningham documented “large crack(s)” in the rear foundation. (Pls.' Local R. 56(a)1 Stmt ¶ 12; Def.'s Local R. 56(a)2 Stmt ¶ 12; see Dkt. #36, Exh. G at 4).[7] On March 24, 2015, William Neal, P.E. prepared a report for Jang. (Pls.' Local R. 56(a)1 Stmt ¶ 11; Def.'s Local R. 56(a)2 Stmt ¶ 11; see Dkt. #36, Exh. F at 1). On September 3, 2015, David Grandpré, a licensed professional engineer since 1986, inspected plaintiffs' property (Dkt. #36, Exh. E at 20; Pls.' Local R. 56(a)1 Stmt ¶ 44; Def.'s Local R. 56(a)2 Stmt ¶ 44; see Dkt. #36, Exh. E at 14), and on November 7, 2016, Grandpré completed his report. (Dkt. #36, Exh. H). The foundation of plaintiffs' home exhibited cracks attributable to the oxidation of iron sulfide minerals in the concrete at the time they submitted their claim to Liberty and at the time that Grandpré inspected the property. (Pls.' Local R. 56(a)1 Stmt ¶ 8; Def.'s Local R. 56(a)2 Stmt ¶ 8; see Dkt. #36, Exh. E at 11; see also Dkt. #36, Exhs. F, H, I & Dkt. #37, Exh. AA.4).[8] Grandpré believes that visible map cracking attributable to iron sulfide oxidation constitutes a substantial impairment of structural integrity. (Pls.' Local R. 56(a)1 Stmt ¶ 10; Def.'s Local R. 56(a)2 Stmt ¶ 10; see Dkt. #36, Exh. E at 14). Grandpré noted that “[s]everal cracks had been patched[]” (Pls.' Local R. 56(a)1 Stmt ¶ 13; Def.'s Local R. 56(a)2 Stmt ¶ 13; see Dkt. #36, Exh. H at 2), [9] and he opined that the foundation is one of the least severely cracked foundations out of the sixty-three that he has observed in connection with his retention by plaintiffs' attorneys. (Pls.' Local R. 56(a)1 Stmt ¶ 27; Def.'s Local R. 56(a)2 Stmt ¶ 27; see Dkt. #36, Exh. E at 35). Petrographic analysis has confirmed that the cracking is attributable to iron sulfide oxidation. (Pls.' Local R. 56(a)1 Stmt ¶ 16; Def.'s Local R. 56(a)2 Stmt ¶ 16; see Dkt. #36, Exh. I at 7).


         The home is safe to live in (Pls.' Local R. 56(a)1 Stmt ¶ 17; Def.'s Local R. 56(a)2 Stmt ¶ 17; see Dkt. #36, Exh. E at 31), and the foundation walls do not need to be shored. (Pls.' Local R. 56(a)1 Stmt ¶ 18; Def.'s Local R. 56(a)2 Stmt ¶ 18; see Dkt. #36, Exh. E at 29). The foundation walls are partially underground and retain soil on the exterior. (Pls.' Local R. 56(a)1 Stmt ¶ 19; Def.'s Local R. 56(a)2 Stmt ¶ 19; see Dkt. #36, Exh. E at 31, 42). The foundation walls are still holding up the above structure, and the foundation walls are not in imminent danger of falling down. (Pls.' Local R. 56(a)1 Stmt ¶¶ 20-21; Def.'s Local R. 56(a)2 Stmt ¶¶ 20-21; see Dkt. #36, Exh. E at 31-32). Grandpré cannot give a ballpark estimate as to when the basement walls will fall down absent replacement, or when the home will become unsafe unless the foundation is replaced. (Pls.' Local R. 56(a)1 Stmt ¶¶ 22-23; Def.'s Local R. 56(a)2 Stmt ¶¶ 22-23; see Dkt. #36, Exh. E at 31-32).

         Grandpré testified that “very good engineer[s]” disagree as to what constitutes a “substantial impairment to structural integrity.” (Pls.' Local R. 56(a)1 Stmt ¶ 30; Def.'s Local R. 56(a)2 Stmt ¶ 30; see Dkt. #36, Exh. E at 12-14).[10] Grandpré testified that Liberty's disclosed engineer, Carl Cianci, P.E., is a “very good engineer.” (Pls.' Local R. 56(a)1 Stmt ¶ 31; Def.'s Local R. 56(a)2 Stmt ¶ 31; see Dkt. #36, Exh. E at 12). Cianci has opined that the basement walls have not suffered a substantial impairment to structural integrity. (Pls.' Local R. 56(a)1 Stmt ¶ 32; Def.'s Local R. 56(a)2 Stmt ¶ 32; see Dkt. #36, Exh. P at 6).[11]



         The standard for summary judgment is well established. The moving party is entitled to summary judgment if it demonstrates that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). This showing may be made by depositions, affidavits, interrogatory answers, admissions, or other exhibits in the record. Fed.R.Civ.P. 56(c) "The substantive law governing the case will identify those facts that are material, and '[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude entry of summary judgment.'" Bouboulis v. Transp. Workers Union of Am., 442 F.3d 55, 59 (2d Cir. 2006), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). If the moving party carries its burden, “the opposing party must come forward with specific evidence demonstrating the existence of a genuine dispute of material fact.” Brown v. Eli Lily & Co., 654 F.3d 347, 358 (2d Cir. 2011), quoting Anderson, 477 U.S. at 249.


         The standard for review for interpreting insurance contracts is well established.

[C]onstruction of a contract of insurance presents a question of law for the court which this court reviews de novo. . . . It is the function of the court to construe the provisions of the contract of insurance . . . . The [i]nterpretation of an insurance policy . . . involves a determination of the intent of the parties as expressed by the language of the policy . .. [including] what coverage the . . . [insured] expected to receive and what the [insurer] was to provide, as disclosed by the provisions of the policy . . . . [A] contract of insurance must be viewed in its entirety, and the intent of the parties for entering it derived from the four corners of the policy . . . [giving the] words . . . [of the policy] their natural and ordinary meaning . . . [and construing] any ambiguity in the terms . . . in favor of the insured . . . .

Conn. Ins. Guar. Ass'n v. Fontaine, 278 Conn. 779, 784-85, 900 A.2d 18 (2006), quoting Hartford Cas. Ins. Co. v. Litchfield Mut. Fire Ins. Co., 274 Conn. 457, 462-63, 876 A.2d 1139 (2005)(additional internal quotations & citation omitted). “[P]rovisions in insurance contracts must be construed as laymen would understand [them] and not according to the interpretation of sophisticated underwriters, and . . . the policyholder's expectations should be protected as long as they are objectively reasonable from the layman's point of view.” Vermont Mut. Ins. Co. v. Walukiewicz, 290 Conn. 582, 592, 966 A.2d 672 (2009)(citations & internal quotations omitted). If the terms of the Policy are unambiguous, such terms “must be given their plain and ordinary meaning and extrinsic evidence is inadmissible to determine the meaning.” United Techs. Corp. v. Am. Home Assur. Co., 989 F.Supp. 128, 145 (D. Conn. 1997)(Arterton, J.)(citations omitted). “If[, however, ] the contractual language is ambiguous and subject to varying reasonable interpretations, the issue of the parties' intent is a question of fact, thereby rendering summary judgment inappropriate.” Royal Ins. Co. of Am. v. Zygo Corp., No. 3:01 CV 1317 (GLG), 2003 WL 21960734, at *2 (D. Conn. Aug. 15, 2003)(citation omitted). “[W]hether an insurance policy is ambiguous is a matter of law for the court to decide[, ]” Travelers Cas. & Sur. Co. v. Neth. Ins. Co., 312 Conn. 714, 740, 95 A.3d 1031 (2014), and ambiguous policy language is construed in favor of coverage. See Conn. Ins. Guar. Assoc., 278 Conn. at 788-89 (citations omitted). Thus, “where each party has a reasonable but different interpretation of the phrases supported by dictionaries and case law, that indicates that the phrases are ambiguous and must be construed against the insurer.” Roberts v. Liberty Mut. Fire Ins. Co., 264 F.Supp.3d 394, 404 (D. Conn. 20017)(Underhill, J.)(citations & internal quotations omitted).[12]


         The Liberty Policy, as modified by its endorsements, states in part that Liberty does not insure “for loss . . . [i]nvolving collapse other than as provided in Additional Coverage 8.[, ] . . . [c]aused by . . . freezing, thawing, pressure or weight of water or ice, . . .to a[] . . . [f]oundation, . . . [, ] or . . . [f]ooting[, ]” or for loss caused by “[w]ear and tear, marring, deterioration; . . .[i]nherent vice, latent defect, . . . [or, ] [s]ettling, shrinking, bulging or expansion including resultant cracking, of pavements, patios, foundations, walls, roofs, or ceilings[.]” (Dkt. #36, Exh. A at 11, 26).[13] The “Additional Coverages[, ]” Liberty insures “direct physical loss to covered property involving collapse of a building or any part of a building caused by . . . [h]idden decay[, ] . . . or . . . [u]se of defective material or methods in construction, remodeling or renovation . . . .” (Id. at 10, 28).

         According to plaintiffs, the threshold question in this case is whether there has been a “collapse of a building or any part of a building” such that the collapse coverage provided by the Additional Coverages section of the homeowner's policy would be triggered. (Dkt. #37, at 8). Specifically, plaintiffs contend that the “collapse” at issue in this case was the result of a “chemical reaction occurring within the walls of the home [which] is not only a form of hidden decay, but also the result of improper materials used in the construction of the basement walls.” (Id. at 9 (footnote omitted); see Dkt. #36, Exh. H, at 3-4). Plaintiffs' engineering expert opines that the “concrete used at the Jang property contained a compound, . . . which was subjected to a chemical reaction[]” that “initially damaged the inside of the concrete on a microscopic level[, ]” and “[e]ventually the expansion became visible at the surface of the walls.” (Dkt. #36, Exh. H at 3).

         As plaintiffs acknowledge, there has been no “catastrophic ‘tumbling down' or ‘falling down' that one often associates with the word ‘collapse.'” (Dkt. #37, at 9-10). Rather, plaintiffs assert that the condition of their home constitutes a “collapse” as defined by the Connecticut Supreme Court in Beach v. Middlesex Mut. Assurance Co., 205 Conn. 246, 252, 532 A.2d 1297 (1987). (Dkt. #37, at 10-14). In Beach, the policy language excluded from coverage loss from “settling, cracking, shrinkage, bulging or expansion of . . . foundations . . . unless . . . collapse of a building . . . not otherwise excluded ensues . . . .” 205 Conn. at 250. The Connecticut Supreme Court held that the term “collapse” is “sufficiently ambiguous to include coverage for any substantial impairment of the structural integrity of a building[]” that “subsequently develops out of a loss that appeared, at its inception, to fall within the rubric of ‘settling, cracking, shrinkage, bulging or expansion.'” Id. at 251-52 (multiple citations omitted). As former Chief Judge Ellen Ash Peters explained in Beach, “[r]equiring the insured to await an actual collapse would not only be economically wasteful; but would also conflict with the insured's contractual and common law duty to mitigate damages.” Id. at 253 n. 2 (internal citation omitted); see also id. at 252-53 (citing the “distinct minority[]” of cases which hold that “‘collapse' unmistakably connotes a sudden falling in, loss of shape, or flattening into a mass of rubble[]”); but see Clough v. Allstate Ins. Co., No. 3:17 CV 140 (JBA), 2017 WL 3763841, at *4-5 (D. Conn. Aug. 29, 2017)(Allstate has limited its coverage by requiring that collapse be “sudden and accidental” such that a process of hidden decay does not trigger coverage until a sudden collapse occurs. The insured must wait until “some portion of the house . . . eventually collapse[s], at which time [the insured] may seek coverage.”); Adams v. Allstate Ins. Co., No. 3:16 CV 1360 (JBA), 2017 WL 3763837, at *3-4 (D. Conn. Aug. 29, 2017)(same).

         Defendant contends that the policy at issue in Beach “has a markedly different collapse provision[, ]” and by defining collapse in the negative by excluding from coverage “settling, cracking, shrinking, bulging or expansion[, ]” as was done in Nida v. State Farm Fire & Cas. Co., 454 So.2d 328, 334 (La.App.), writ denied, 458 S. 2d 486 (1984), this policy is significantly different from the one at issue in Beach. (Dkt. #35, at 14-15 (citation omitted)). Defendant argues that in light of this difference in language, “substantial impairment of structural integrity' is not the standard for ‘collapse'[.]” (Dkt. #35, at 15).

         In Beach, the Connecticut Supreme Court observed that “[i]f the defendant wished to rely on a single facial meaning of the term ‘collapse' . . ., it ha[d] the opportunity expressly to define the term to provide for the limited usage it now claims to have intended.” 205 Conn. at 251, citing Nida, 454 So.2d at 334. In this case, defendant asserts that Liberty has done just that with the provision excluding settling, cracking, shrinkage, or expansion. (Dkt. #35, at 14-15). Instead, defendant argues that Beach is not binding authority, but rather, a recently decided case from the California Court of Appeals, Tustin Field Gas & Food, Inc. v. Mid-Century Ins. Co., 13 Cal.App. 5th 220');">13 Cal.App. 5th 220 (Cal.Ct.App. 2017), is the authority this court should follow. (Dkt. #35, at 14-15). In Tustin Field, the California Court of Appeals upheld the trial court's conclusion that “because the Policy exclud[ed] ‘settling' and the like, a ‘substantial impairment of structural integrity' is not a ‘collapse' as a matter of law.” 13 Cal.App. 5th at 228 (citation omitted). This conclusion is consistent with California law. See Doheny West Homeowners' Ass'n v. American Guar. & Liability Ins. Co., 60 Cal.App.4th 400, 405-06 (Cal.Ct.App. 1997). Connecticut law, however, governs this case.

         Moreover, a slight difference in policy language found in Liberty policies has been addressed by this Court in Bacewicz v. NGM Ins. Co., No. 3:08 CV 1530 (JCH), 2010 WL 3023882, at *6 (D. Conn. Aug. 2, 2010). In Bacewicz, now-Chief Judge Janet C. Hall concluded that although the policy language in that case differed slightly from the language in Beach in that “collapse” did not include “cracking and bulging[, ]” the cracking and bulging “may have been symptomatic of chemical decomposition occurring within the concrete of the basement walls, ” which would not “preclude a reasonable jury from concluding that [the insurer] is liable from failing to cover an substantial impairment to structural integrity caused by such decomposition.” Id. Judge Hall also found that “it is difficult - if not impossible - to imagine any ‘collapse' that did not at some point manifest itself in the form of cracks, bulges, or other physical deformities.” Id. Similarly, the standard articulated in Beach has been applied to the policy language at issue in this case. See Roberts, 264 F.Supp.3d at 404-09; Belz v. Peerless Ins. Co., 46 F.Supp.3d 157, 163 (D. Conn. 2014)(Hall, J.). Accordingly this Court concludes that Beach is the binding authority in this case. The next question, therefore, is whether there exists an issue of fact as to whether the structural integrity of plaintiffs' home has become structurally impaired.

         Defendant argues extensively that even under Beach, the cracking that has occurred in plaintiffs' home is not a “collapse[, ]” and therefore, the claim is properly excluded under the terms of the Policy. (Dkt. #35, at 15-21). However, there are two dueling expert opinions on this issue, thereby clearly establishing an issue of material fact.[14] According to Grandpré, the concrete basement walls of plaintiffs' home are “substantially structurally impaired.” (Dkt. #36, Exh. H at 4). Liberty's expert, Cianci, agrees that there is map cracking in the foundation of plaintiffs' home, “indicative of a material defect with the original concrete used to pour the foundation[, ]” but Cianci opines that the foundation “is not in imminent danger of collapse, or in a state of collapse[, ]” and the “observed condition . . . is not a substantial impairment to the structural integrity of a building[.]” (Id., Exh. P, at 7). At this stage of the case, it is not the Court's role to weigh the credibility of the evidence of the record and of these two experts' testimony. See Gabriel v. Liberty Mut. Fire Ins. Co., No. 3:14 CV 1435 (VAB), 2017 WL 6731713, at *6 (D. Conn. Dec. 29, 2017). Thus, the issue of whether there exists a substantial impairment of the structural integrity of plaintiffs' home is a matter left for the jury.[15] See id. (“Because, on the record currently before this Court, a jury could conclude that the damage amounted to a substantial impairment, a genuine issue of fact remains for resolution at trial.”)(citation omitted); Roberts, 264 F.Supp.3d at 414 (“[T]he losses to the Robertses' basement walls are not excluded from coverage as a matter of law. Whether the Robertses have proved that their walls suffered a ‘substantial impairment of [ ] structural integrity' remains a matter for the jury to decide”); Metsack, 2017 WL 706599, at *6 (“a material dispute exists regarding whether this damage is sufficiently ‘substantial' to constitute a ‘collapse' under the Liberty Mutual Policy's terms”); Belz v. Peerless Ins. Co., 204 F.Supp.3d 457, 463-64 (D. Conn. 2016)(“[t]he question of whether the damage was covered under the ‘collapse' provisions of the insurance policy cannot appropriately be resolved at the summary judgment stage and should be left for the jury”), recon. denied, 13 CV 1315 (VAB), 2016 WL 6542828 (D. Conn. Nov. 3, 2016).

         1. TIMING OF THE LOSS

         Defendant contends that the Policy at issue “only responds to loss which occurs during the Policy[, ]” (Dkt. #35, at 9; Dkt. #36, Policy at 20), and asserts the claimed damages predate the June 22, 2007 Policy. (Dkt. #35, at 10). Additionally, defendant points to the “Suit Against Us” provision in the Policy to argue that “[e]ven if any aspect of the claim were covered . . ., it is barred” by this provision. (Id. at 11-12).[16]

         The foundation was poured on this property in 1985. (Dkt. #10, Count 1 ¶ 4, at 2). Defendant argues that Grandpré's testimony that map cracking would present itself ten to fifteen years after the pour, and the opinion of plaintiffs' engineer, Neal, that the cracks in the foundation are attributable to a chemical reaction which ...

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