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Karas v. Liberty Insurance Corp.

United States District Court, D. Connecticut

April 30, 2018



         Steven and Gail Karas sued their insurer, Liberty Insurance Corp. (“Liberty”), for denying coverage under their homeowners' insurance policy for a loss to their basement walls. The Karases allege that Liberty (1) breached its insurance contract with the Karases; (2) breached the implied covenant of good faith and fair dealing; and (3) committed unfair and deceptive practices proscribed by the Connecticut Unfair Insurance Practices Act (“CUIPA”) and the Connecticut Unfair Trade Practices Act (“CUTPA”). Liberty moved for summary judgment on September 5, 2017. Doc. No. 57. At a hearing held on December 14, 2017, Doc. No. 69, I denied Liberty's motion with respect to the breach of contract claim and granted it with respect to the bad faith and CUTPA/CUIPA claim, substantially for the reasons stated in my decision in Roberts v. Liberty Mutual Insurance Co., 264 F.Supp.3d 394 (D. Conn. 2017).

         On December 20, 2017, Liberty moved to certify questions to the Connecticut Supreme Court. Doc. No. 70. The Karases initially opposed certification, but changed their position upon learning that my colleague United States District Judge Robert N. Chatigny was likely to certify questions in another concrete collapse case, Vera v. Liberty Mutual Fire Insurance Co., 3:16-cv-00072 (RNC). All parties to both cases now support certification. Furthermore, the question presented by this case and by Vera-whether the definition of “collapse” given in Beach v. Middlesex Mutual Assurance Co., 205 Conn. 246 (1987), requires coverage in the present circumstances-has the potential to resolve a large number of lawsuits pending throughout the state.[1] Therefore, I grant Liberty's motion to certify questions to the Connecticut Supreme Court.

         I. Standard of Review

         Under Connecticut law, “[t]he Supreme Court may answer a question of law certified to it by a court of the United States . . . if the answer may be determinative of an issue in pending litigation in the certifying court and if there is no controlling appellate decision, constitutional provision or statute of this state.” Conn. Gen. Stat. § 51-199b(d). When deciding whether to certify a question to the Connecticut Supreme Court, a court should consider, among other factors, “(1) the absence of authoritative state court decisions; (2) the importance of the issue to the state; and (3) the capacity of certification to resolve the litigation.” O'Mara v. Town of Wappinger, 485 F.3d 693, 698 (2d Cir. 2007). “Where a question . . . implicates the weighing of policy concerns, principles of comity and federalism strongly support certification.” Parrot v. Guardian Life Ins. Co. of Am., 338 F.3d 140, 144 (2d Cir. 2003).

         II. Background[2]

         The Karases' house is among many in northeastern Connecticut built with concrete supplied by the J.J. Mottes Concrete Co. (“Mottes”). The stone aggregate used in Mottes concrete contains significant amounts of pyrrhotite (Fe1-xS), a ferrous mineral that reacts with water, oxygen, and concrete paste to form expansive secondary minerals such as gypsum, ettringite, and thaumasite. The expanding minerals crack and destabilize the concrete, “lead[ing] to [its] premature deterioration.” See generally Conn. Dep't of Consumer Prot., Report on Deteriorating Concrete in Residential Foundations, App'x D, at 52 (2016).

         In October 2013, the Karases discovered that their basement walls were cracking, crumbling, and deteriorating in the manner typical of Mottes concrete. On November 15, 2013, the Karases reported a claim under their homeowners' insurance policy to Liberty. Liberty denied the Karases' claim the same day, asserting that the loss described was “deterioration” and was therefore not covered under the policy.

         On December 11, 2013, the Karases filed suit against Liberty, contending that the loss was a “collapse” under the construction given in Beach v. Middlesex Mutual Assurance Co. The Karases' policy covers “collapse” as follows:

Collapse. We insure for direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following:
b. Hidden decay; c. Hidden insect or vermin damage; d. Weight of contents, equipment, animals or people; e. Weight of rain which collects on a roof; or f. Use of defective material or methods in construction, remodeling or renovation.
Loss to an awning, fence, patio, pavement, swimming pool, underground pipe, flue, drain, cesspool, septic tank, foundation, retaining wall, bulkhead, pier, wharf or dock is not included . . . unless the loss is a direct result of the collapse of a building.
Collapse does not include settling, cracking, shrinking, bulging or expansion.

         In Beach v. Middlesex Mutual Assurance Co., the Connecticut Supreme Court held that the term “collapse” in a homeowners' insurance policy, when otherwise undefined, was “sufficiently ambiguous to include coverage for any substantial impairment of the structural integrity of a building.” 205 Conn. at 252. The Beach Court specifically rejected the insurer's contention that “‘collapse' . . . unambiguously contemplates a sudden and complete falling in of a structure, ” but did not further define the standard of “substantial impairment of [] structural integrity.” Id. at 250, 252. In the present case-as in many others pending in this district-the parties essentially dispute whether the damage constitutes a “collapse” under Beach.

         III. ...

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