Agosti v. Merrimack Mut. Fire Ins. Co.

• Decision Date: 28 August 2017
• Docket Number: No. 3:16–cv–01686 (SRU),3:16–cv–01686 (SRU)
• Citation: 279 F.Supp.3d 370
• Court: U.S. District Court — District of Connecticut
• Parties: Barry AGOSTI, and Robin Agosti, Plaintiffs, v. MERRIMACK MUT. FIRE INS. CO., and Allstate Ins. Co., Defendants.

279 F.Supp.3d 370

Barry AGOSTI, and Robin Agosti, Plaintiffs,

v.MERRIMACK MUT. FIRE INS. CO., and Allstate Ins. Co., Defendants.

No. 3:16–cv–01686 (SRU)

United States District Court, D. Connecticut.

Signed August 28, 2017

Brian D. Danforth, Tolisano & Danforth, LLC, Ellington, CT, for Plaintiffs.

Derek E. Donnelly, Stuart G. Blackburn, Law Office of Stuart G. Blackburn, Windsor Locks, CT, Jessica A.R. Hamilton, Jenna L. Veronneau, Raymond T. DeMeo, Robinson & Cole, LLP, Hartford, CT, for Defendants.

RULING AND ORDER

Stefan R. Underhill, United States District Judge

In the present insurance dispute, Allstate Insurance Co. ("Allstate") has moved to dismiss the claims filed against it by Barry and Robin Agosti. The Agostis' complaint alleges in Counts Four, Five, and Six that (1) Allstate breached its contract with the Agostis by denying coverage under their homeowner's insurance policy (the "Allstate Policy") for damage to their basement walls; (2) Allstate breached the implied covenant of good faith and fair dealing by baselessly denying coverage; and (3) Allstate committed unfair and deceptive practices proscribed by the Connecticut Unfair Insurance Practices Act ("CUIPA"), as enforced through the Connecticut Unfair Trade Practices Act ("CUTPA"). Because the Allstate Policy provides coverage only for an "entire collapse," and the Agostis have alleged no facts to suggest such a collapse occurred here, I grant the motion and dismiss the pertinent counts of the complaint.

I. Standard of Review

A motion to dismiss for failure to state a claim is designed "merely to assess the legal feasibility of a complaint, not to assay the weight of evidence which might be offered in support thereof." Ryder Energy Distribution Corp. v. Merrill Lynch Commodities , 748 F.2d 774, 779 (2d Cir. 1984) (quoting Geisler v. Petrocelli , 616 F.2d 636, 639 (2d Cir. 1980) ). When deciding a motion to dismiss pursuant to Rule 12(b)(6), the court must accept the material facts alleged in the complaint as true, draw all reasonable inferences in favor of the plaintiffs, and decide whether it is plausible that plaintiffs have a valid claim for relief. Ashcroft v. Iqbal , 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555–56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; Leeds v. Meltz , 85 F.3d 51, 53 (2d Cir. 1996).

Under Twombly , "[f]actual allegations must be enough to raise a right to relief above the speculative level," and assert a cause of action with enough heft to show entitlement to relief and "enough facts to state a claim to relief that is plausible on its face." 550 U.S. at 555, 570, 127 S.Ct. 1955 ; see also Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 ("While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations."). The plausibility standard set forth in Twombly and Iqbal obligates the plaintiff to "provide the grounds of his entitlement to relief" through more than "labels and conclusions, and a formulaic recitation of the elements of a cause of action." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (quotation marks omitted). Plausibility at the pleading stage is nonetheless distinct from probability, and "a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of [the claims] is improbable, and ... recovery is very remote and unlikely." Id. at 556, 127 S.Ct. 1955 (quotation marks omitted).

II. Background

Plaintiffs Barry and Robin Agosti own and reside at a house in Tolland, Connecticut, which is protected by a homeowner's insurance policy underwritten by defendant Allstate. Compl., Doc. No. 1, at Count 1, ¶¶ 1, 3. Prior to September 2015, the Agostis gradually "observed visible cracking in the concrete of their home." Id. at ¶ 5. On September 15, 2015, the Agostis "had their basement inspected by a professional structural engineer" because they were concerned about the "visible cracking patterns in the basement walls" and were "aware[ ] ... [of] deteriorating concrete issues [from] recent media reports." Id. at ¶ 6. The engineer's inspection "indicated the concrete deterioration and cracking were caused by a chemical reaction in the concrete," which he concluded "would continue to progressively deteriorate the basement walls, rendering the structure unusable." Id. at ¶ 7. As a result, the engineer "recommended replacement of the concrete basement walls." Id.

Following the inspection, on November 10, 2015, the Agostis "made a timely formal claim for coverage under [their] homeowner's insurance policy" with Allstate. Id. at Count 4, ¶ 8. They asserted that the loss to their basement walls was covered as a "collapse" due to "hidden decay and/or defective materials." Id. at ¶ 10. Although the Allstate Policy provides that Allstate generally "do[es] not cover loss to the property ... consisting of or caused by: ... 12. Collapse ... [or] 15.... (g) settling, cracking, shrinking, bulging or expansion of ... foundations [or] walls," Allstate Policy, Ex. C to Allstate's Mot. Dismiss, Doc. No. 17–4, at 31–33, it does offer coverage pursuant to an "Additional Protection," which reads as follows:

Collapse

[Allstate] will cover:

a) the entire collapse of a covered building structure;

b) the entire collapse of part of a covered building structure; and

c) direct physical loss to covered property caused by (a) or (b) above.

For coverage to apply, the collapse of a building structure specified in (a) or (b) above must be a sudden and accidental direct physical loss caused by one or more of the following:

a) a loss we cover under Section I, Coverage C—Personal Property Protection;b) hidden decay of the building structure;

c) hidden damage to the building structure caused by insects or vermin;

d) weight of persons, animals, equipment or contents;

e) weight of rain or snow which collects on a roof;

f) defective methods or materials used in construction, repair, remodeling or renovation.

Collapse does not include settling, cracking, shrinking, bulging or expansion.

Id. at 40 (emphasis removed).

Allstate denied the Agostis' claim on April 19, 2016. Compl., Doc. No. 1, at Count 4, ¶ 11. The Agostis characterize that denial as based on "interpretations of policy provisions [that] are contrary to the [Collapse] provisions of the policy." Id. ¶ 12.

On October 7, 2016, the Agostis filed a complaint against Allstate in Connecticut Superior Court, Judicial District of Tolland at Rockville. See Notice of Removal, Doc. No. 1, at 1. The Agostis allege that Allstate breached the insurance contract (Count Four), breached the implied covenant of good faith and fair dealing (Count Five), and violated CUTPA/CUIPA (Count Six). Allstate removed the Agostis' complaint to this court on October 10, 2016. See id. On November 30, 2016, Allstate moved to dismiss the counts of the complaint against it pursuant to Federal Rule of Civil Procedure 12(b)(6). See Doc. No. 17. I heard argument on the motion on January 30, 2017. See Doc. No. 28.

III. Discussion

Allstate moves to dismiss the Agostis' claim for breach of contract (Count Four) "on the grounds that the alleged damage is not covered under the plain language of the Allstate Policy." Allstate's Mot. Dismiss, Doc. No. 17, at 1. Allstate asserts that if I dismiss the claim for breach of contract, I also must dismiss the claims for breach of the implied covenant of good faith and fair dealing (Count Five) and for violation of CUTPA/CUIPA (Count Six), because "neither can be maintained in the absence of a breach of contract." Id. at 2. Alternatively, even if I decline to dismiss the breach of contract claim, Allstate asks that I dismiss the remaining claims "on the separate and independent grounds that ... Allstate's denial of coverage was not in bad faith, and its ... coverage position here [was] reasonable and fairly debatable." Id.

The Agostis respond that they have "stated a sufficient cause of action under the [Allstate] Policy" because the policy "fail[s] to exclude losses from a chemical reaction." Pls.' Mem. Opp'n Mot. Dismiss, Doc. No. 22, at 4. They argue that the exceptions to the Additional Protection for Collapse cited by Allstate do not preclude coverage, id. at 6–7, and that their allegations of bad faith and violation of CUTPA/CUIPA are likewise sufficient. Id. at 9–13.

A. Count Four: Beach of Contract

Allstate asserts that I must dismiss the Agostis' claim for breach of contract because "the alleged damage is not covered under the plain language of the Allstate Policy." Allstate's Mot. Dismiss, Doc. No. 17, at 1. Accordingly, I first must determine whether coverage exists under the policy for the deterioration of the Agostis' basement walls.

"[A]s a matter of general insurance law, the insured has the burden of proving that a benefit is covered." Paese v. Hartford Life & Accident Ins. Co. , 449 F.3d 435, 441 (2d Cir. 2006). An insurance contract is interpreted by the court according to "the same general rules that govern the construction of any written contract." Johnson v. Conn. Ins. Guar. Ass'n , 302 Conn. 639, 643, 31 A.3d 1004 (2011). Thus, "the determinative question is the intent of the parties, that is, what coverage the ... insured expected to receive and what the insurer was to provide, as disclosed by the provisions of the policy." Lexington Ins. Co. v. Lexington Healthcare Grp. , 311 Conn. 29, 37–38, 84 A.3d 1167 (2014) (internal alterations omitted). If the policy's terms are "clear and unambiguous," then that language "must be accorded its natural and ordinary meaning." Johnson , 302 Conn. at 643, 31 A.3d 1004. If the terms of the insurance policy are "ambiguous," however, meaning "reasonably susceptible to more than one reading," then ambiguity "must be construed in favor of the insured because the insurance company drafted the policy." Id.

1. Does coverage exist under Coverage A (Dwelling Protection)?

The Agostis argue that their loss is covered under Coverage A (Dwelling Protection)...