Metsack v. Liberty Mut. Fire Ins. Co.
| Decision Date | 21 February 2017 |
| Docket Number | CIVIL ACTION NO. 3:14-CV-01150 (VLB) |
| Court | U.S. District Court — District of Connecticut |
| Parties | STEPHEN A. METSACK AND GAIL D. METSACK, Plaintiffs, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY AND ALLSTATE INSURANCE COMPANY, Defendants. |
This action arises out of an insurance dispute between the Plaintiffs, Stephen A. Metsack and Gail D. Metsack (the "Metsacks") and Defendants Liberty Mutual Fire Insurance Company ("Liberty Mutual"), and Allstate Insurance Company ("Allstate"). The Metsacks allege breach of contract, breach of the implied covenant of good faith and fair dealing, and violations of the Connecticut Unfair Insurance Practices Act ("CUIPA") and Unfair Trade Practices Act ("CUTPA"), stemming from Defendants' decision to decline coverage for damage to the basement walls of Plaintiffs' home under their homeowners insurance policies (the "Policies"). Liberty Mutual and Allstate separately have moved for summary judgment with respect to these claims. For the reasons that follow, Liberty Mutual's Motion for Summary Judgment [Dkt. 59] is DENIED, and Allstate's Motion for Summary Judgment [Dkt. 65] is GRANTED.
The Metsacks have lived at 148 Laurel Lane, Ashford, Connecticut ("the Property") since 1992. . The Property was insured by Allstate under separate policies of insurance, each with one-year terms, beginning on June 27, 1991 and ending on September 9, 2009 [Compl. ¶ 55; Dkt. 67-9 ( ) . From September 2009 until the present, Plaintiffs have been insured by Liberty Mutual. [Compl. ¶ 6]. Mr. Metsack acted as his own general contractor when the house was originally constructed in 1992. [Dkt. 74-1 (S. Metsack Dep. at 13]. The concrete used to construct the basement walls of the home was supplied by the JJ Mottes Company. [S. Metsack Dep. at 71; Dkt. 74- 3 ( ) at 4-5].
In the years following the home's construction, the Metsacks noticed what they believed to be "minor cracking" in the basement walls. [S. Metsack Dep. at 75- 76; G. Metsack Dep. at 19; Dkt. 74-4 at 10-11]. Stephen Metsack recalled first noticing this cracking prior to 2008, but Gail Metsack did not recall observing cracking prior to 2009. [S. Metsack Dep. at 47; G. Metsack Dep. at 11-12]. Despite noticing minor cracking, the Metsacks perceived no problems with the basement walls of their home until April of 2014, when a friend observed exterior cracking and suggested that the Metsacks speak with a contractor about it. Id. This contactor inspected the property and suggested for the first time that the cracks might be associated with defective concrete. [S. Metsack Dep. at 78]. On April 15, 2014, the Metsacks noticed water infiltrating the basement for the first time since the home was constructed, leading them to believe that their basementwalls were in fact affected by defective concrete. [S. Metsack Dep. at 84-87; G. Metsack Dep. at 19; Dkt 74-4 at 10-11].
The Metsacks, Liberty Mutual, and Allstate each retained experts to investigate the causes of the cracking in the Metsacks' basement walls. All agree that a chemical reaction involving the oxidation of iron sulfide materials in defective concrete provided by the JJ Mottes Company caused the concrete to expand and crack. The Metsacks' expert, David Grandpre, P.E., opined in an October 30, 2015 report that "the severity of deterioration of the concrete basement walls compromised the[ir] structural integrity and will continue to weaken until they are no longer competent to perform their intended function of supporting the weight of the floors, walls, and roof." [Dkt. 67-5, Exh. A at 4]. He further stated that "the concrete walls can no longer be relied on to continue to perform their intended function of resisting the lateral pressures exerted on them by soil and water in the ground and for supporting the vertical loads of the wood-framed house." Id. Grandpre conceded that the house was "still safe to live in," but that because the basement walls cannot be counted on to continue to support the weight of the rest of the house in the future, they were substantially impaired. [Dkt. 74-6 ("Grandpre Dep." at 50-51]. He also stated that the point of substantial impairment is when horizontal cracks begin to appear in the concrete, which typically occurs between ten and eighteen years after the concrete is poured. [Grandpre Dep. at 54-55, 100-103].
On April 18, 2014, the Metsacks submitted a claim to Liberty Mutual, which mentioned water infiltration, but did not inform Liberty that they had spoken to a contractor about their basement walls or that the concrete in the basement walls was supplied by JJ Mottes. [G. Metsack Dep. at 58-59]. On April 25, 2014, Liberty Mutual sent an independent adjuster to inspect the Property. [Dkt. 61-8]. The adjuster's report noted cracks in all four basement walls, some as wide as a quarter of an inch, and possible structural displacement. Id. As possible causes of the damage, the adjuster listed "hydrostatic pressure, improper concrete mix, [and] freeze thaw," and she recommended consulting an engineer to determine whether the damage was structural. Id. Liberty Mutual did not consult an engineer, and by letter dated May 12, 2014, denied the Metsacks' claim on the grounds that the damage was caused by "settling/earth movement and ground water intrusion." [Dkt. 61-9].
The Liberty Mutual Policy provides coverage under Section 8 of the Policy 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." [Dkt. 30-1 ¶ 8]. The Liberty Mutual Policy does not include a definition for "collapse," but excludes loss to a "foundation . . . unless the loss is a direct result of the collapse of a building," and excludes "settling, cracking, shrinking, bulging or expansion." Id.
The Metsacks identify numerous lawsuits against Liberty Mutual or its affiliates that involve the denial of coverage for losses resulting from defective JJ Mottes Company concrete. [See Dkt. 72 ¶¶ 23-26].1 They also submit five denial of coverage letters from Liberty Mutual and related entities from the Liberty Mutual Group. The letters date from September 2012 to August 2015, and blame the basement wall cracking reported on "settling or earth movement" (August 11, 2015), "settling, expansion" (September 19, 2012), "long term moisture infiltration" and "original construction methods" (April 21, 2015), "faulty construction" (January 10, 2013), and "faulty workmanship or materials" (October 15, 2014). [Dkt. 72-9].
The Metsacks notified Allstate of the condition of their walls and submitted an insurance claim on March 3, 2015. . Plaintiffs state that they had attempted to notify Allstate earlier by way of their independent agent, who refused to submit the claim on their behalf. [G. Metsack Dep. at 15-18]. The claim referenced the April 15, 2014 water intrusion and the fact that while the Metsacks no longer had an active policy with Allstate, the loss may have occurred during the time that Allstate covered the property. [G. Metsack Dep. at 21-22, 25-26]. Allstate orally denied the claim on March 10, 2015, and sent the Metsacks a letter dated March 27, 2015 memorializing the denial. [G. Metsack Dep. at 26-27; Dkt. 74-5 ¶ 3].
The Metsacks were insured under two separate Allstate policies: one covering the period between 1991 and 1994 ("First Allstate Policy"), and a second covering the period between 1994 and 2009 ("Second Allstate Policy") (collectively, "Allstate Policies"). [Torres Aff., Exh. 1 at 4, Exh. 2 at 3; Exh. 3 at 15]. The Allstate Policies cover "the entire collapse of a covered building structure" and the "entire collapse of part of a building structure," so long as the collapse is "a sudden and accidental direct physical loss caused by . . . hidden decay of the building structure" or "defective methods or materials used in construction, repair, remodeling or renovation." [Dkt. 30-3 at 15]. The Allstate Policy does not contain a specific definition for "collapse," but defines "building structure" as "a structure with walls and a roof." Id. at 3. Like the Liberty Mutual Policy, the Allstate Policies exclude "settling, cracking, shrinking, bulging or expansion." Id.
The Metsacks also offer evidence that other than the claim advanced in the instant lawsuit, Allstate has encountered and denied at least eight separateclaims for coverage with respect to homes constructed with concrete supplied by the JJ Mottes Company. [Dkt. 74 ¶ 53].2 Plaintiffs offer two letters they claim deny coverage on the ground that the insured failed to provide prompt notice [Dkt. 74 ¶ 54].3 The denial letters state that the basement wall cracking was examined by the structural engineer Leonard Morse-Fortier. Valls v. Allstate Insurance Co., Dkt. 24-5, No. 3:16-cv-1310 (VAB) ("Valls Letter"); Carney v. Allstate Insurance Co., Dkt. 30-2, No. 3:16-cv-592 (VLB) ("Carney Letter"). The Valls Letter suggested that the loss "may not have occurred during the Allstate policy term," and stated that coverage would be denied on the grounds that the cracking was not a "sudden and accidental direct physical loss," and that the cracking was not an "entire collapse" because the "house remains occupied, the foundation walls appear plumb, there is very little visible damage to the walls themselves, the walls support the house structure above, and the walls retain the soil that surrounds the house." Id. at 3-4. The Carney Letter similarly stated that the cracking was not a "sudden and accidental direct...
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