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Moura v. Harleysville Preferred Insurance Co.

United States District Court, D. Connecticut

October 18, 2019

DENNIS M. MOURA & ERICA R. MOURA, Plaintiffs,
v.
HARLEYSVILLE PREFERRED INSURANCE COMPANY & LIBERTY INSURANCE CORPORATION, Defendants.

          RULING AND ORDER ON MOTION TO DISMISS

          VICTOR A. BOLDEN UNITED STATES DISTRICT JUDGE.

         Dennis and Erica Moura (“the Mouras” or “Plaintiffs”) originally brought this lawsuit against Harleysville Preferred Insurance Company and Liberty Insurance Corporation (collectively, “Defendants”) in Connecticut Superior Court. Harleysville Preferred Insurance Company (“Harleysville”) then removed this lawsuit to the District of Connecticut.

         The Mouras' Amended Complaint brings breach of contract claims and claims under the Connecticut Unfair Insurance Practices Act (“CUIPA”) and the Connecticut Unfair Trade Practices Act (“CUTPA”) against both Defendants.

         Harleysville moved to dismiss the counts against Harleysville alone-Counts One, Two, and Three of the Amended Complaint-on March 20, 2019. That motion is now before the Court.

         For the following reasons, the motion to dismiss is GRANTED in part and DENIED in part. Count One, seeking declaratory relief, is dismissed from the case, but the claims brought under Counts Two and Three, for breach of contract and under CUTPA, will remain.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         A. Factual Allegations [1]

         This case is one of many “crumbling concrete” cases in this District.

         In June of 2009, the Mouras purchased their home in South Windsor, Connecticut, a home built in 1998. Am. Compl. ¶ 7.

         From 2009 until 2012, the Mouras allegedly insured their home through a homeowner's policy issued by Harleysville. Id. ¶ 8.

         Since 2012, the Mouras have allegedly insured their home through a homeowner's policy issued by Liberty Insurance Corporation (“Liberty”). Id. ¶ 48.

         In March of 2017, the Mouras “noticed that the basement walls of their home had a series of horizontal and vertical cracks throughout after seeing local news coverage concerning the deterioration of basement walls in Tolland County.” Id. ¶ 10. The Mouras allegedly immediately began investigating the “pattern cracking, ” consulting with “various contractors and professionals.” Id. ¶ 11.

         The Mouras allegedly learned through their investigation that the form of “pattern cracking” found in the basement walls of their home was due to a chemical compound found in certain basement walls constructed in the late 1980s and the early 1990s with concrete most likely from the J.J. Mottes Concrete Company, ” id. ¶ 12, and that this chemical compound would, when mixed “with the water, sand and cement necessary to form the concrete, began to oxidize (rust) and expand, breaking the bonds of the concrete internally and reducing it to rubble, ” id. ¶ 13.

         The Mouras allege that “[a]t some point between the date on which the basement walls were poured and March of 2017 the basement walls suffered a substantial impairment to their structural integrity.” Id. ¶ 15. Plaintiffs allege that “[i]t is only a question of time until the basement walls of the plaintiffs' home will fall in due to the exterior pressure from the surrounding soil, ” id. ¶ 16, and that “[w]ith the falling in of the basement walls, the entire home will fall into the basement, ” id. ¶ 17.

         The Mouras allege that, “[p]ursuant to the terms of the homeowner's policies issued to the plaintiffs, Harleysville agreed to provide coverage for the collapse of a building or any part of a building caused by hidden decay or the use of defective materials or methods in construction, ” id. ¶ 20, and that “[t]he damage suffered to the basement walls of the plaintiffs' home is a coverage loss under the terms of one or more of the homeowner's policies issued by Harleysville during the years that it covered their home, ” id. ¶ 21.

         On or about April 17, 2017, the Mouras allegedly notified Harleysville of the condition of their basement walls. Id. ¶ 18.

         In a letter dated February 23, 2018, Harleysville allegedly denied coverage. Id. ¶ 22. The Mouras claim that the “grounds offered by Harleysville for the denial of coverage are contrary to the express provisions of the homeowner's insurance policies it issued to the [P]laintiffs.” Id. ¶ 23.

         The Mouras further allege that Harleysville

participates in the Insurance Services Office, Inc., (“ISO”) which is a cooperative organization formed and controlled by its participants for the purpose, 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 actions taken by insurers in response to such claims.

Id. ¶ 32. The ISO is allegedly “instrumental in drafting policy provisions, ” and it allegedly “prepares interpretations or advice as to the meaning of these provisions.” Id. ¶ 33.

         Through the ISO, Harleysville allegedly “has knowledge that most, if not all, insurers responding to concrete decay claims in residential structures in northeastern Connecticut have attempted to deny coverage on the grounds that the condition is the result of one or more excluded causes, ” id. ¶ 36, and “has knowledge of cases . . . where the plaintiffs were awarded judgment against the insurer on a concrete decay claim based on policy language nearly identical to that in the [P]laintiffs' policy, ” id. ¶ 37.

         B. Procedural History

         On February 8, 2018, the Mouras sued Harleysville and Liberty Insurance Company in Connecticut Superior Court. Notice of Removal Ex. A, ECF No. 1-1 at 7 (Mar. 9, 2018) (Complaint, Moura v. Harleysville Preferred Ins. Co., TTD-cv18-6014177-S (Feb. 8, 2018)).

         On March 9, 2018, Harleysville removed the case to this Court. Notice of Removal, ECF No. 1 (Mar. 9, 2018).

         On April 18, 2018, the Mouras filed a motion to amend or correct their Complaint. Mot. to Amend/Correct Compl., ECF No. 19 (Apr. 18, 2018). Liberty Insurance Company objected to the motion to amend or correct on May 9, 2018. Obj. to Pls.' Mot. for Leave to Amend Compl., ECF No. 25 (May 9, 2018).

         On February 26, 2019, the Court granted in part and denied in part Plaintiffs' motion to amend or correct. Order Granting in Part and Denying in Part Mot. to Amend/Correct Compl., ECF No. 31 (Feb. 26, 2019).

         On March 8, 2019, Plaintiffs submitted an Amended Complaint. Am. Compl., ECF No. 32 (Mar. 8, 2019). The Amended Complaint seeks a declaratory judgment, stating that Harleysville denied coverage to Plaintiffs in violation of the terms of the Plaintiffs' insurance policy; brings a breach of contract claim against Defendants for denying claims for crumbling concrete coverage (Counts Two and Four); and brings claims under CUIPA and CUTPA (Counts Three and Five). Id.

         On March 20, 2019, Harleysville moved to dismiss all claims against Harleysville- Counts One, Two, and Three of the Amended Complaint. Mot. to Dismiss, ECF No. 33 (Mar. 20, 2019); Mem. Sup. Mot. to Dismiss (“Def.'s Mem.”), ECF No. 34 (Mar. 20, 2019).

         On April 10, 2019, Plaintiffs filed a memorandum in opposition to Harleysville's motion to dismiss. Mem. Opp. Mot. to Dismiss (“Pls.' Mem.”), ECF No. 35 (Apr. 10, 2019).

         On April 23, 2019, Harleysville replied to Plaintiffs' response to Harleysville's motion to dismiss. Reply to Response to Mot. to Dismiss (“Def.'s Reply”), ECF No. 36 (Apr. 23, 2019).

         On October 16, 2019, the Court held a hearing on Harleysville's motion to dismiss. Minute ...


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