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Rudeen v. Allstate Insurance Co.

United States District Court, D. Connecticut

March 20, 2018

SUSAN RUDEEN, Plaintiff,
v.
ALLSTATE INSURANCE CO., THE HANOVER INSURANCE CO., MASSACHUSETTS BAY INSURANCE CO., AND UTICA FIRST INSURANCE CO. Defendants.

          RULING ON MOTIONS TO DISMISS

          Michael P. Shea, U.S.D.J.

         This is one of many recent cases in this district alleging that insurers have wrongly denied coverage for damage to the foundations of plaintiffs' homes caused by defective concrete from the J.J. Mottes Concrete Company. Susan Rudeen filed this action in state court against the four homeowners' insurance companies that insured her home at various intervals from 1996 to the present-Allstate Insurance Co., the Hanover Insurance Co., Massachusetts Bay Insurance Co., and Utica First Insurance Co.-alleging that their refusal to cover damage to her basement walls from this faulty concrete breached the policies and violated other legal duties. (ECF No. 1.) Allstate removed the case to this court on November 7, 2016. (Id.) Allstate and Utica First now have moved to dismiss Rudeen's amended complaint, arguing that Rudeen has failed to allege facts that would bring her claimed losses within the coverage afforded by their homeowners' insurance policies. (ECF Nos. 26, 28, 36) For the reasons that follow, I GRANT Allstate's motion to dismiss and DENY Utica First's.

         I. Factual Allegations

         According to the allegations in the complaint, Allstate Insurance Co. (Allstate) insured Susan Rudeen's home at 30 Harriet Drive in Coventry, Connecticut from 1996 through 2002. (ECF No. 26 at ¶¶ 8-9.) Rudeen made all required insurance payments during that period. (Id. at ¶ 10.) Hanover Insurance Co. insured Rudeen's home from 2002 through 2005, and Rudeen made all required insurance payments during that time. (Id. at ¶¶ 60-61.) Massachusetts Bay Insurance Co. insured Rudeen's home from 2005 through 2014, and Rudeen made all required insurance payments during that time. (Id. at ¶¶ 84-85.) Utica First Insurance Co. (Utica First) has insured Rudeen's home from 2016 through the present, and Rudeen made all required insurance payments during that time. (Id. at ¶¶ 108-09.)

         “In mid to late October of 2015, ” Rudeen “noticed that the basement walls in the addition of her home had a series of horizontal and vertical cracks.” (ECF No. 26 at ¶ 11.) The addition was built in the mid-1980s. (Id. at ¶ 8.) “In response to noticing this degradation, the plaintiff undertook an investigation of this condition, its cause, and the method of repair by consulting with contractors and engineers in late 2015 and early 2016.” (Id. at ¶ 12.) “Upon further inquiry into the cause of the decay, ” Rudeen “discovered that the form of ‘pattern cracking' found in the basement walls of the addition was due to a chemical compound found in certain concrete walls constructed in the late 1980s and early 1990s with concrete most likely from the J.J. Mottes Concrete Company.” (Id. at ¶ 13.) She alleges that “[t]he aggregate used by the J.J. Mottes Concrete Company in manufacturing the concrete in that particular time period contained a chemical compound which, with its mixture with the water, sand[, ] and cement necessary to form the concrete, began to oxidize (rust) and expand, breaking the bonds of the concrete and reducing it to rubble.” (Id. at ¶ 14.) She states that “[t]here is no known scientific or engineering method or process which is effective in reversing the decay[;] it continues to advance with or without the presence of visible water.” (Id. at ¶ 15.)

         Rudeen claims that “[a]t some point between the date on which the basement walls were poured and the month of October[] 2015, the basement walls of the addition suffered a substantial impairment to their structural integrity.” (ECF No. 26 at ¶ 16.) She alleges that “[i]t is only a question of time until the basement walls of the addition to [her] home will fall in due to the exterior pressure from the surrounding soil.” (Id. at ¶ 16.) “With the falling in of the basement walls of the addition, the entire addition will fall into the basement.” (Id. at ¶ 18.) She also alleges that “[w]hile the process of decay occurs over the course of years, ultimately resulting in substantial impairment and complete degradation, it may cause sudden events throughout the course of decay.” (Id. at ¶ 19.) “As the chemical reaction progresses and the strength of the wall weakens, external forces may cause a series of sudden events where the walls bulge and shift in some increment or pieces of concrete become dislodged and fall to the floor.” (Id. at ¶ 20.)

         A. Specific Allegations and Claims against Allstate

         On May 5, 2016, “after consulting with an engineer familiar with the condition present in her home, ” Rudeen “promptly notified Allstate . . . of the condition of the basement walls in the addition.” (ECF No. 26 at ¶ 21.) She alleges that “[b]y notifying Allstate of the condition, the plaintiff made a timely claim for coverage of the loss in accordance with the terms of all the homeowner[s'] policies issued to her by Allstate.” (Id. at ¶ 22.) Allstate denied her claim on October 6, 2016. (Id. at ¶ 26.) She claims that this breached her homeowners' policies with Allstate and that the cost of replacing the basement walls will be at least $150, 000. (Id. at ¶¶ 31-32.)

         Rudeen also alleges that Allstate participates in the Insurance Services Office, Inc. (ISO), a cooperative organization of insurers that “collect[s] data on the type of claims made, the policy provisions cited for the basis of each claim, the geographic areas in which the claimed damage has occurred, and the actions taken by insurers in response to such claims.” (ECF No. 26 at ¶ 45.) Rudeen alleges that, through participation in ISO, Allstate had knowledge of “the number of claims” in northeastern Connecticut resulting from similar concrete decay. (Id. at ¶ 48.)

         Rudeen alleges that Allstate “denied coverage by citing to policy exclusions that are wholly inapplicable to the damage suffered to the basement walls of [her] home.” (ECF No. 26 at ¶ 35.) She states that “Allstate intentionally cited policy exclusions wholly inapplicable to [her] claim for coverage knowing full well that [Rudeen], like most insureds, is unsophisticated with respect to the complex language contained in insurance policies.” (Id. at ¶ 36.) She claims that “[t]hrough the ISO, Allstate has knowledge of cases such as Bacewicz v. NGM Insurance . . . where the plaintiffs were awarded judgment against the insurer on a concrete decay claim based on policy language nearly identical to that in the plaintiff's policies.” (Id. at ¶ 50.) According to Rudeen, Allstate “has a general business practice of acting intentionally to mislead insureds into believing that the collapse of basement walls of a building caused by hidden decay or by the use of faulty or defective materials or methods of construction is not a covered loss.” (Id. at ¶ 40.)

         Based on these allegations, Rudeen seeks a declaratory judgment that Allstate has a duty to provide coverage and has brought claims of breach of contract, breach of the covenant of good faith and fair dealing, and violation of the Connecticut Unfair Insurance Practices Act, Conn. Gen. Stat. §§ 38a-815 et seq., (CUIPA) and the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. §§ 42-110a et seq., (CUTPA) against Allstate. Allstate has moved to dismiss all of these claims. (ECF No. 28.)

         B. Specific Allegations and Claims Against Utica First

         On or about May 5, 2016, “after consulting with an engineer familiar with the condition present in her home, ” Rudeen “promptly notified Utica . . . of the condition of the basement walls in the addition.” (ECF No. 26 at ¶ 119.) She alleges that “[b]y notifying Utica of the condition, the plaintiff made a timely claim for coverage of the loss in accordance with the terms of all the homeowner's policies issued to her by Utica.” (Id. at ¶ 120.) Utica First denied her claim on July 11, 2016. (Id. at ¶ 121.) Rudeen alleges that “[t]he grounds offered by Utica for the denial of coverage are contrary to the express provisions of the homeowners' policies issued to the plaintiff” and that “[i]n denying coverage . . . Utica breached its contract[ual] obligations under the homeowners' policies issued to” Rudeen. (Id. at ¶¶ 124-25.)

         Rudeen alleges that Utica “denied coverage by citing to policy exclusions that are wholly inapplicable to the damage suffered to the basement walls of [her] home.” (ECF No. 26 at ¶ 129.) Rudeen further alleges that “Utica intentionally cited policy exclusions wholly inapplicable to [her] claim for coverage knowing full well that [Rudeen], like most insureds, is unsophisticated with respect to the complex language contained in insurance policies.” (Id. at ¶ 130.) She states that Utica First “acted intentionally to mislead the plaintiff and convince her that the damage suffered to her home was not covered solely to preserve its own assets by avoiding payment for a covered loss. (Id. at ¶ 131.) She alleges that “deny[ing] coverage by relying upon inapplicable policy exclusions” is Utica First's “general business practice” and is “evidenced by Utica's neglect or refusal to provide coverage for at least one . . . other homeowner affected with the same damage” as Rudeen. (Id. at ¶ 140 (citing Michael Willenborg, et al. v. Unitrin Preferred Ins. Co., et al., Tolland Superior Court Docket No. TTD-CV-16-6010936-S).)

         Based on these allegations, Rudeen has brought claims of breach of contract, breach of the covenant of good faith and fair dealing, and violation of CUIPA and CUTPA against Utica First. Utica First has moved to dismiss all of these claims. (ECF No. 36.)

         II. Legal Standard

         A. Motion to Dismiss

         Under Federal Rule of Civil Procedure 12(b)(6), the Court must determine whether the plaintiff has alleged “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). Under Twombly, the Court accepts as true all of the complaint's factual allegations-but not conclusory allegations-when evaluating a motion to dismiss. Twombly, 550 U.S. at 572. The Court must “draw all reasonable inferences in favor of the non-moving party.” Vietnam Ass'n for Victims of Agent Orange v. Dow Chem. Co., 517 F.3d 104, 115 (2d Cir. 2008). “When a complaint is based solely on wholly conclusory allegations and provides no factual support for such claims, it is appropriate to grant defendants['] motion to dismiss.” Scott v. Town of Monroe, 306 F.Supp.2d 191, 198 (D. Conn. 2004). For a complaint to survive a motion to dismiss, “[a]fter the court strips away conclusory allegations, there must remain sufficient well-pleaded factual allegations to nudge plaintiff's claims across the line from conceivable to plausible.” In re Fosamax Products Liab. Litig., No. 09-cv-1412 (JFK), 2010 WL 1654156, at *1 (S.D.N.Y. Apr. 9, 2010).

         In deciding a Rule 12(b)(6) motion, I may consider documents attached to, integral to, or incorporated by reference in the complaint. See Fed. R. Civ. P. 10(c); Chambers v. Time Warner, 282 F.3d 147, 153 (2d Cir. 2002) (“Even where a document is not incorporated by reference, the court may nevertheless consider it where the complaint relies heavily upon its terms and effect, which renders the document integral to the complaint.”) (internal quotations omitted).

         B. Interpreting Insurance Policies

         “An insurance policy is to be interpreted by the same general rules that govern the construction of any written contract.” Connecticut Medical Ins. Co. v. Kulikowski, 286 Conn. 1, 5 (2008) (citation and quotation marks omitted).

If the terms of the policy are clear and unambiguous, then the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning . . . . When interpreting an insurance policy, we must look at the contract as a whole, consider all relevant portions together and, if possible, give operative effect to every provision in order to reach a reasonable overall result…. As with contracts generally, a provision in an insurance policy is ambiguous when it is reasonably susceptible to more than one reading. Under those circumstances, any ambiguity in the terms of an insurance policy must be construed in favor of the insured because the insurance company drafted the policy.

Id. at 5-6 (citations, quotation marks, and alterations omitted).

         III. Analysis

         A. Allstate's ...


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