Hyde v. Allstate Insurance Co.

          MEMORANDUM OF DECISION GRANTING ALLSTATE'S MOTION TO DISMISS [DKT. 36]

          Hon. Vanessa L. Bryant United States District Judge.

         Before the Court is a Motion to Dismiss from Allstate Insurance Company (“Allstate”) in yet another concrete decay case. Decades ago, a number of homes in Connecticut were constructed with a certain type of concrete which, in certain cases, would suffer from a damaging corrosive chemical reaction. Now, years later, residents are discovering pattern cracking in the concrete of their homes and are seeking coverage of the damage from their insurance companies.

         Here, the Hydes made claims with two insurers, Allstate and Liberty, for the damage resulting from the concrete decay afflicting their basement walls. Each company denied the claim, stating that the policies did not cover the claimed loss. The Hydes brought the instant lawsuit alleging breach of contract and violations of CUTPA and CUIPA. Allstate has now moved to dismiss all claims against it, arguing that the Hydes have failed to state a claim upon which relief can be granted in light of the Allstate policy language. The Court agrees for the reasons explained below and accordingly dismisses Counts I and II of the First Amended Complaint.

         I. FACTUAL BACKGROUND

         Plaintiffs Richard T. Hyde and Denise B. Hyde (the “Hydes”) have owned the residential property at 36 Willow Creek Drive, Tolland, Connecticut (the “Property”) since 1998. [Dkt. 29 (First Am. Compl.) ¶ 6]. The residence was built in 1997. Id. Between 1998 and 2014, the Hydes insured the Property via Allstate homeowner's insurance policies (the “Policies”), which automatically renewed annually. Id. ¶¶ 7-8. The relevant terms of the policies from 1998 to 2014 remained the same.^[1] See [Dkt. 36-1 at n.1].

         In the fall of the 2016, having decided to pursue selling their home, the Hydes hired an engineer to confirm that the Property was not afflicted by the concrete decay issues they had seen in the media in Connecticut. Id. ¶¶ 9-10. The engineer found that the Property had been constructed with defective concrete, finding “pattern cracking” in the basement walls of the Property. Id. ¶¶ 11-12. The engineer told the Hydes that the concrete was likely from the J.J. Mottes Concrete Company and included a chemical compound which, when mixed with the other elements, “began to oxidize (rust) and expand, breaking the bonds of the concrete internally and reducing it to rubble.” Id. ¶¶ 12-13.

         The Hydes allege that “[a]t some point between the date on which the basement walls of the home were poured and the month of December of 2016, the basement walls suffered a substantial impairment to their structural integrity.” Id. ¶ 15. The Hydes reported the damage to Allstate on May 15, 2017, making a claim for the loss in accordance with the terms of the Policies. Id. ¶ 20. By letter dated September 26, 2017, Allstate denied the claim for coverage stating that the Policies did not cover the loss. Id. ¶ 21.

         The Policies state that Allstate “will cover sudden and accidental direct physical loss” to covered property, such as the Hydes' home. [Dkt. 36-2 (Mot. Dismiss, Ex. A, Allstate Policy) at 28 of PDF]. The Policies further state that they “do not cover loss consisting of or caused by any of the following: . . . rust or other corrosion, mold, wet or dry rot; . . . settling, cracking, shrinking, bulging or expansion of pavements, patios, foundations, walls, floors, roofs or ceilings; . . . Planning, Construction, or Maintenance, meaning faulty, inadequate or defective . . . materials used in repair, construction, renovation or remodeling.” Id. at 29-30 of PDF. Additionally, the Policies specify that they do not cover “[c]ollapse, except as specifically provided in Section I - Additional Protection under item 11, ‘Collapse.'” Id.

         Under “Additional Protection” for “Collapse, ” the Policies state that they cover “the entire collapse” of a covered building or part of a covered building structure. Id. at 37 of PDF; [Dkt. 29 ¶ 22]. But in order “[f]or this coverage to apply, the collapse . . . must be a sudden and accidental direct physical loss caused by one or more of the following: . . . hidden decay of the building structure . . . [or] defective methods or materials used in construction, repair, remodeling or renovation.” [Dkt. 36-2 at 37 of PDF]. They further specify that “[c]ollpase does not include settling, cracking, shrinking, bulging or expansion.” Id.

         The Hydes allege that the Property's “basement walls . . . are in a state of collapse, which collapse was the result of a covered cause.” [Dkt. 29 ¶ 23]. They further allege that their claimed loss is covered under the terms of the Policies and Allstate's denial of their claim was contrary to the express provisions of said Policies and thus a breach of the Policy contracts. Id. ¶¶ 24-26.

         The Hydes also allege that Allstate's participation in the Insurance Services Office, Inc. (the “ISO”)-“a cooperative organization formed and controlled by its participants for the purposes, among others, of collecting 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 action taken by insurers in response to such claims”-in addition to Allstate's handling of the Hydes' and others' concrete decay claims, constitute unfair and deceptive trade practices in violation of the Connecticut Unfair Insurance Practices Act (“CUIPA”) and the Connecticut Unfair Trade Practices Act (“CUTPA”). Id. ¶¶ 30-47.

         Allstate filed the Motion to Dismiss now before the Court, seeking to dismiss both of the claims against it for failure to state a claim. Allstate argues that the clear language of the Policies bar coverage of the Hydes' claimed loss because the damage was not “sudden and accidental, ” nor is it an “entire collapse, ” and further because of the specific exclusions for loss caused by cracking, rust, and defectives materials. See [Dkt. 36-1 (Mem. Mot. Dismiss) at 3]. The Hydes disagree and argue that the language of the Policies is ambiguous, and therefore should be construed in favor of coverage. See [Dkt. 38 (Opp'n Mot. Dismiss) at 4].

         II. LEGAL STANDARD

         To survive a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), the complaint must plead “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). In general, the Court's review on a motion to dismiss pursuant to Rule 12(b)(6) “is limited to the facts as asserted within the four corners of the complaint, the documents attached to the complaint as exhibits, and any documents incorporated by reference.” McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007).

         The Court must “accept[] all factual allegations as true and draw[] all reasonable inferences in favor of the plaintiff” when deciding a motion to dismiss. Litwin v. Blackstone Grp., L.P.,634 F.3d 706, 715 (2d Cir. 2011). A court may, however, “choose to begin by identifying pleadings that, because they are no more than conclusions, are not ...