Sirois v. USAA Casualty Insurance Co.

          RULING ON MOTION FOR SUMMARY JUDGMENT

          Michael P. Shea, U.S.D.J.

         Plaintiffs Michael L. Sirois and Alicia M. Sirois 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.) Plaintiffs brought claims for 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.) USAA has moved for summary judgment on the breach of contract claim, arguing that the insurance policy at issue did not cover the alleged damage. It also argues that it cannot be held liable under CUIPA/CUTPA because there was no breach of contract, or, in the alternative, because its liability was not reasonably clear. (ECF No. 49.) For the reasons set forth below, the defendant's motion for summary judgment is granted with respect to the plaintiffs' CUTPA claim but denied with respect to the plaintiffs' breach of contract claim.

         I. Factual Background

         The following facts, which are taken from the parties' Local Rule 56(a) Statements and the exhibits, are undisputed unless otherwise indicated.

         A. Damage to the Plaintiffs' Home

         The plaintiffs bought their home in Tolland, Connecticut, in June of 2010. (ECF No. 51, Defendant's Local Rule 56(a)1 Statement (“Def.'s L.R. 56(a)1 Stmt.”) at ¶ 1; ECF No. 56-1, Plaintiffs' Local Rule 56(a)2 Statement (“Pl.'s L.R. 56(a)2 Stmt.”) at ¶ 1.) The home was built in 1985. (Def.'s L.R. 56(a)1 Stmt. at ¶ 2; Pl.'s L.R. 56(a)2 Stmt. at ¶ 2.) Since 2010, USAA has provided the plaintiffs with homeowners' insurance for the property, under consecutive policies, each providing coverage for one year. (Def.'s L.R. 56(a)1 Stmt. at ¶ 3; Pl.'s L.R. 56(a)2 Stmt. at ¶ 3.)

         In December 2015, Mr. Sirois noticed a crack in the basement walls of his home. (Def.'s L.R. 56(a)1 Stmt. at ¶¶ 4-5; Pl.'s L.R. 56(a)2 Stmt. at ¶¶ 4-5.) Mr. Sirois noted that the crack “didn't seem concerning” at the time and that “there was nothing that would indicate that something further had to be done.” (Def.'s L.R. 56(a)1 Stmt. at ¶ 5; Pl.'s L.R. 56(a)2 Stmt. at ¶ 5.) In April 2016, however, Mr. Sirois read an article about the defective concrete problem affecting homeowners in Connecticut, and, after doing so, asked an inspector, Dean Soucy, to inspect the Property. (Def.'s L.R. 56(a)1 Stmt. at ¶ 6; Pl.'s L.R. 56(a)2 Stmt. at ¶ 6.) The inspector pointed out “a variety of faults [and] cracks” in the foundation walls to Mr. Sirois. (Def.'s L.R. 56(a)1 Stmt. at ¶ 7; Pl.'s L.R. 56(a)2 Stmt. at ¶ 7.) Mr. Sirois then pointed out the cracks to Ms. Sirois. Ms. Sirois had not previously noticed any cracks in the foundation walls. (Def.'s L.R. 56(a)1 Stmt. at ¶ 8; Pl.'s L.R. 56(a)2 Stmt. at ¶ 8.) On April 16, 2016, the plaintiffs submitted a claim for coverage to USAA. (Def.'s L.R. 56(a)1 Stmt. at ¶ 9; Pl.'s L.R. 56(a)2 Stmt. at ¶ 9.) Following investigation of the claim, USAA denied the claim by letter dated June 1, 2016. (Def.'s L.R. 56(a)1 Stmt. at ¶ 10; Pl.'s L.R. 56(a)2 Stmt. at ¶ 10.)

         B. USAA's Policies

         i. 2010-2014 Policies

         The 2010-2014 policies provide the following the following “Additional Coverage” for “collapse”:

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.

((Def.'s L.R. 56(a)1 Stmt. at ¶ 12; Pl.'s L.R. 56(a)2 Stmt. at ¶ 12; ECF No. 50-1 at 11)

The 2010-2014 policies contain the following definition of “collapse”:

“Collapse” means:

a. A sudden falling or caving in;

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.

Damage consisting solely of settling, cracking, shrinking, bulging or expansion is not covered by this additional insurance unless it is the direct result of “collapse”.

(ECF No. 50-1 at 11 (2010-2011 policy), 92 (2011-2012 policy), 154 (2012-2013 policy), 210 (2013-2014 policy).)

         ii. 2014-2016 Policies

         The 2014-2016 policies contain somewhat different language. The definition of “collapse” in the 2014-2016 policies drops the last sentence excluding damage consisting “solely” of “settling, cracking, bulging or expansion.” The new definition provides simply as follows:

“Collapse” means:

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.

(ECF No. 50-1 at 268 (2014-2015 policy), 374 (2015-2016 policy), 439 (2016-2017 policy).)^[1]

         The 2014-2016 policies also contain the following exclusion:

1. . . . [W]e do not insure for damage consisting of or caused directly or indirectly by any of the ...