Huschle v. Allstate Insurance Co.

          ORDER GRANTING MOTIONS TO DISMISS

          JEFFREY ALKER MEYER UNITED STATES DISTRICT JUDGE

         Plaintiffs Frank and Cynthia Huschle have filed this lawsuit against their three home insurance companies: Allstate Insurance Company, 21st Century Premier Insurance Company f/k/a AIG Insurance Company, and Teachers Insurance Company. Plaintiffs allege that their insurers have failed to pay for damage to their home's basement walls caused by cracking and deteriorating concrete. Plaintiffs allege that this constitutes a breach of the insurers' policies, and also that 21st Century and Teachers have violated the Connecticut Unfair Insurance Practices Act (CUIPA) and the Connecticut Unfair Trade Practices Act (CUTPA). Defendants Allstate and Teachers have moved to dismiss plaintiffs' claims against them. For the reasons stated below, I will grant their motions to dismiss.

         Background

         The following facts are taken from plaintiffs' amended complaint and defendants' insurance policies which are integral to the complaint. Plaintiffs purchased their home in Tolland, Connecticut in 1998, the year it was built. Doc. #33 at 2 (¶ 7). In January 2017, they noticed that the basement walls of their home had a series of horizontal and vertical cracks throughout. Id. at 3 (¶ 10). They immediately investigated the “pattern cracking” condition, its cause, and the methods of repair by consulting with local professionals. Ibid. (¶ 11). They learned that the “pattern cracking” came from a chemical compound in certain walls constructed in the 1980s and 1990s with concrete from the J.J. Mottes Concrete Company. Ibid. (¶ 12). The Mottes concrete was made from an aggregate that included a chemical compound which started to rust and expand, breaking the concrete's internal bonds and reducing it to rubble. Ibid. (¶ 13). Plaintiffs allege that concrete made with “good and sufficient materials” should instead last for centuries rather than for decades. Id. at 13 (¶¶ 84-85).

         Plaintiffs also allege that it is “only a question of time” until their basement walls will fall in from exterior soil pressure. Id. at 3 (¶ 14). Plaintiffs allege that, while the process of decay occurs over the course of years, “it may cause sudden events throughout the course of decay, ” such as “events where the walls bulge and shift in some increment or pieces of concrete become dislodged and fall to the floor.” Id. at 3-4 (¶¶ 15-16).

         Plaintiffs insured their home under an Allstate policy from 1998 to 2001. Id. at 3 (¶ 8). The Allstate policy covered “sudden and accidental direct physical loss” to insured buildings and structures. Doc. #32-1 at 16. The policy placed several limits on that coverage. The policy generally did not cover losses caused by “faulty, inadequate or defective . . . materials used in repair, construction, renovation or remodeling.” Id. at 17-18. The policy only covered collapses as defined in the “Additional Protection” section. Id. at 16-17. That section covered “the entire collapse” of all or part of a covered building, provided the collapse is “a sudden and accidental direct physical loss.” Id. at 25. The policy covered collapses caused by defective construction materials, but noted that a collapse “does not include settling, cracking, shrinking, bulging or expansion.” Ibid. When plaintiffs learned about the cracks in their basement walls, they sent a letter to Allstate about the cracks and claimed coverage. Doc. #33 at 4 (¶ 17). Allstate denied the claim. Ibid. (¶ 22).

         Plaintiffs insured their home with 21st Century from 2001 to 2009. Id. at 5 (¶ 31). They notified 21st Century about the cracks in January 2017, and 21st Century denied their claim. Id. at 7 (¶¶ 41, 46). 21st Century has not moved to dismiss plaintiffs' claims against it.

         Plaintiffs have insured their home with Teachers Insurance Company since 2009. Id. at 11 (¶ 72). One Teachers policy covered plaintiffs' home from 2009 to 2013, and another Teachers policy has covered plaintiffs' home from 2013 to the present. The 2009 policy did not say anything about collapse. Doc. #39-1 at 57-58. The 2009 policy did, however, state that Teachers would not pay for loss “caused by the settling, cracking, shrinking, bulging or expanding of a building structure.” Id. at 58. The policy also excluded coverage for any loss “which results from . . . a defect, a weakness, an inadequacy, a fault or unsoundness in materials used in construction or repair” of the insured property. Id. at 62. The 2013 policy explicitly covers collapse, including collapses caused by decay or by the use of defective construction materials. Id. at 14-15. The policy provides that “collapse” means an “abrupt caving in, falling in, falling down, or giving way that prevents the building or the part of the building from being occupied for the purpose for which it was intended just before” the collapse. Id. at 15. The policy further provides that collapse does not include a building “in danger of caving in, falling in, falling down, or giving way.” Ibid.

         Plaintiffs notified Teachers about the basement wall cracks on January 16, 2017, and Teachers denied their claim on February 1, 2017. Doc. #33 at 13-14 (¶¶ 92-94). Plaintiffs also allege that the Teachers has knowingly engaged in a practice of falsely denying coverage and unfairly failing to settle claims. Id. at 16-17 (¶¶ 109-116).

         Plaintiffs have sued Allstate (Counts I and II) and 21st Century (Counts III and IV) for breach of contract and for declaratory judgments that their policies cover the cracking. Id. at 2-8 (¶¶ 7-54). Plaintiffs have also asserted a claim for a violation of CUIPA and CUTPA against 21st Century (Count V). Id. at 8-11 (¶¶ 55-70). Lastly, plaintiffs have sued Teachers for breach of contract and for violating CUIPA and CUTPA (Counts VI and VII). Id. at 11-18 (¶¶ 71-118). Allstate and Teachers have moved to dismiss all the counts against them under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim on which relief can be granted. Doc. #37; Doc. #38.

         Discussion

         For purposes of a motion to dismiss for failure to state a claim, the Court must accept as true all factual matters alleged in a complaint, although a complaint may not survive unless the facts it recites are enough to state plausible grounds for relief. See, e.g., Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Mastafa v. Chevron Corp., 770 F.3d 170, 177 (2d Cir. 2014). This “plausibility” requirement is “not akin to a probability requirement, ” but it “asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678. Because the focus must be on what facts a complaint alleges, a court is “not bound to accept as true a legal conclusion couched as a factual allegation” or “to accept as true allegations that are wholly conclusory.” Krys v. Pigott, 749 F.3d 117, 128 (2d Cir. 2014). In short, my role in reviewing a motion to dismiss under Rule 12(b)(6) is to determine if the complaint-apart from any of its conclusory allegations-alleges enough facts to state a plausible claim for relief.

         A court must interpret the terms of an insurance policy as it would a contract to determine if the text of the policy makes the parties' intent unambiguously clear. Only if the text of the policy is ambiguous does a court look to other evidence of the parties' intent and in light of the rule that any ambiguity or exclusion in the policy must be construed in favor of the insured. See, e.g., Conn. Ins. Gaur. Ass'n v. Drown, 314 Conn. 161, 187-88 (2014).

         Claims ...