Karas v. Liberty Ins. Corp.
| Decision Date | 21 July 2014 |
| Docket Number | No. 3:13cv01836 SRU.,3:13cv01836 SRU. |
| Court | U.S. District Court — District of Connecticut |
| Parties | Steven KARAS and Gail Karas, Plaintiffs, v. LIBERTY INSURANCE CORP., Defendant. |
Jeffrey R. Lindequist, Michael D. Parker, Law Office of Michael D. Parker, Springfield, MA, for Plaintiffs.
Philip T. Newbury, Jr., Kieran W. Leary, Howd & Ludorf, Hartford, CT, for Defendant.
RULING ON MOTION TO DISMISS
Steven and Gail Karas (the “Karases”) bring suit against their homeowner's insurance provider, Liberty Insurance Corporation (“Liberty Mutual”), for its alleged failure to indemnify them for damages to the basement walls of their home.1 The complaint contains three counts alleging breach of contract, breach of the implied covenant of good faith and fair dealing, 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”). Liberty Mutual argues that the plaintiffs' complaint should be dismissed in its entirety for failure to state a claim. For the reasons stated below, I DENY defendant's motion to dismiss (doc. # 12).
A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) 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, Inc., 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 plaintiff, and decide whether it is plausible that the plaintiff has 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 (). 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).
Liberty Mutual insures the Karases' home. In October 2013, the Karases noticed a series of horizontal and vertical cracks in the basement walls of their home. They immediately investigated the condition and discovered that the cracks were 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. The aggregate that company used to manufacture concrete at the time contained a chemical compound which, when mixed with water, sand, and cement necessary to form the concrete, began to oxidize and expand, breaking the bonds of the concrete internally and reducing it to rubble. There is no known way to reverse the deterioration, which continues whether or not there is visible water present. At some point between the date on which the basement walls were poured and October 2013, the structural integrity of the basement walls suffered a substantial impairment. It is only a question of time until the basement walls of the Karases' home will fall in, and as a result the entire home will fall into the basement.
The Karases first learned of the existence of the substantial impairment in October 2013 and notified Liberty Mutual on November 15, 2013 of their claim for coverage under the Homeowner's Policy (the “Policy”). Liberty Mutual's claims representative denied the claim that same day by letter claiming that the policy does not afford coverage for deterioration. The Policy provides coverage for “direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following: ... (b) Hidden decay; ... or (f) Use of defective material or methods in construction, remodeling or renovation.” Compl. Ex. A, at 12, 32 (doc. # 1–1). The Karases allege that Liberty Mutual's denial of coverage breached its contractual obligation under the Policy.
This action followed, and the Karases have brought claims alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of CUIPA and CUTPA. On February 18, 2014, Liberty Mutual filed a Motion to Dismiss the Complaint in its entirety.
The elements of a breach of contract claim are the formation of an agreement, performance by one party, breach of the agreement by the other party, and damages. Flagstar Bank, FSB v. Ticor Title Ins. Co., 660 F.Supp.2d 346, 350 (D.Conn.2009) ; Meyers v. Livingston, Adler, Pulda, Meiklejohn and Kelly, P.C., 311 Conn. 282, 291, 87 A.3d 534 (2014).
Construing the allegations in the light most favorable to the plaintiffs, the Karases have alleged the existence of insurance for the Karases' home issued by Liberty Mutual, and thus have shown the formation of an agreement. See Compl. at ¶ 6; Compl. Ex. A (doc. # 1–1). The Karases have also shown their performance of the agreement, which allegedly includes the payment of premium each year and a timely claim for coverage. See Compl. at ¶¶ 6, 18.
With respect to the breach of the agreement, the Karases allege that the basement walls suffered a substantial impairment to their structural integrity, which constitutes a collapse. See Beach v. Middlesex Mut. Assurance Co., 205 Conn. 246, 251–53, 532 A.2d 1297 (1987) (). The collapse was allegedly caused by the use of a defective concrete and its decay. The Karases allege that their loss should be covered by the Policy, but Liberty Mutual denied the coverage and therefore breached the agreement. Liberty Mutual moves to dismiss the claim, however, because the basement walls are the “foundation” or “retaining walls” of the house, which are excluded from coverage.3
If the words in the policy are plain and unambiguous, the language must be accorded its natural and ordinary meaning; however, if the insurance coverage is defined in terms that are ambiguous, such ambiguity is resolved against the insurer, and the construction most favorable to the insured will be adopted. See Empire Fire & Marine Ins. v. Lang, 655 F.Supp.2d 150, 156–57 (D.Conn.2009) ; Peerless Ins. Co. v. Gonzalez, 241 Conn. 476, 482, 697 A.2d 680 (1997) ; Beach, 205 Conn. at 249–50, 532 A.2d 1297. A contract is unambiguous when its language conveys a definite and precise meaning. Mount Vernon Fire Ins. Co. v. El Rancho De Pancho LLC, 985 F.Supp.2d 235, 239–40 (D.Conn.2013) ; Isham v. Isham, 292 Conn. 170, 181, 972 A.2d 228 (2009) ; Poole v. City of Waterbury, 266 Conn. 68, 88, 831 A.2d 211 (2003). If the language is susceptible to more than one reasonable interpretation, the contract is ambiguous. El Rancho De Pancho, 985 F.Supp.2d at 239–40 ; Isham, 292 Conn. at 181, 972 A.2d 228 ; Poole, 266 Conn. at 88, 831 A.2d 211.4 Nevertheless, the mere fact that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous. Poole, 266 Conn. at 88, 831 A.2d 211 ; Kelly v. Figueiredo, 223 Conn. 31, 37, 610 A.2d 1296 (1992).
Liberty Mutual argues that the undefined terms “foundation” and “retaining wall” should be interpreted on the basis of their dictionary definitions. See New London Cnty. Mut. Ins. Co. v. Zachem, 145 Conn.App. 160, 166, 74 A.3d 525 (2013) (). The Merriam–Webster Dictionary, as Liberty Mutual argues, defines “foundation” as “a usually stone or concrete structure that supports a building from underneath; ... an underlying base or support; especially: the whole masonry substructure of a building”; “retaining wall” is defined as “a wall built to resist lateral pressure other than wind pressure; esp: one to prevent an earth slide.” Def.'s Mem. Supp. Mot. Dismiss 5–6, 8. Liberty Mutual further argues that the United States District Court for the District of New Jersey held in Wurst v. State Farm Fire & Cas. Co., 431 F.Supp.2d 501, 506 (D.N.J.2006) that “foundation” in an insurance policy includes the basement walls. In contrast, the Karases argue that the dictionary definition of “foundation” could be the footing upon which the basement walls rest, which does not include the basement walls. See Bacewicz v. NGM Ins. Co., No. 3:08cv1530 (JCH), 2010 WL 3023882, at *4 (D.Conn. Aug. 2, 2010) (citing Turner v. State Farm Fire & Cas. Co., 614 So.2d 1029, 1032 (Ala.1993) ) ( that “foundation” could mean the piece of concrete at the base of the wall rather than a concrete basement wall itself, thus the term is ambiguous). The...
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