Van Natta v. Great Lakes Reinsurance (UK) SE

Decision Date21 May 2020
Docket NumberNo. 3:18-cv-438 (SRU),3:18-cv-438 (SRU)
Citation462 F.Supp.3d 113
CourtU.S. District Court — District of Connecticut
Parties VAN NATTA, et al., Plaintiffs, v. GREAT LAKES REINSURANCE (UK) SE, Defendant.

David G. Jordan, Jeffrey J. Vita, Samantha Oliveira, Saxe, Doernberger & Vita, PC, Trumbull, CT, for Plaintiffs.

Dharmaputhiran P. Niles, Fleischner Potash Cardali Coogler Chernow Greisman Stark & S, White Plains, NY, Gilbert Morris Coogler, White, Fleischner & Fino LLP, New York, NY, for Defendant.


Stefan R. Underhill, United States District Judge

Steven Van Natta ("Steve") and his mother Liette Van Natta ("Liette") (together, the "Plaintiffs") sue Great Lakes Reinsurance (UK) SE, now known as Great Lakes Insurance SE ("Great Lakes"), for breach of an insurance contract (the "Policy"). Great Lakes has refused to provide insurance coverage for severe water and mold damage to the Plaintiffs’ property, which Steve used as a second home. After the damage, the Plaintiffs paid out-of-pocket to gut the property's interior, sold the property at a significant discount, and now seek damages for what the cost of reconstruction would have been (they did not actually perform the reconstruction). Great Lakes moves for summary judgment based on two exclusions under the Policy and because the Plaintiffs’ claim for damages is speculative. For the reasons that follow, Great Lakes's motion for summary judgment, doc. no. 44, is granted in substantial part and denied in part .

I. Standard of Review

Summary judgment is appropriate when the record demonstrates that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see also Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 256–57, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (plaintiff must present affirmative evidence to defeat a properly supported motion for summary judgment).

When ruling on a summary judgment motion, the court must construe the facts of record in the light most favorable to the nonmoving party and must resolve all ambiguities and draw all reasonable inferences against the moving party. Anderson , 477 U.S. at 255, 106 S.Ct. 2505 ; Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Adickes v. S.H. Kress & Co. , 398 U.S. 144, 158–59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) ; see also Aldrich v. Randolph Cent. Sch. Dist. , 963 F.2d 520, 523 (2d Cir. 1992) (court is required to "resolve all ambiguities and draw all inferences in favor of the nonmoving party"). When a motion for summary judgment is properly supported by documentary and testimonial evidence, however, the nonmoving party may not rest upon the mere allegations or denials of the pleadings but must present sufficient probative evidence to establish a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Colon v. Coughlin , 58 F.3d 865, 872 (2d Cir. 1995).

"Only when reasonable minds could not differ as to the import of the evidence is summary judgment proper." Bryant v. Maffucci , 923 F.2d 979, 982 (2d Cir. 1991) ; see also Suburban Propane v. Proctor Gas, Inc. , 953 F.2d 780, 788 (2d Cir. 1992). If the nonmoving party submits evidence that is "merely colorable," or is not "significantly probative," summary judgment may be granted. Anderson , 477 U.S. at 249–50, 106 S.Ct. 2505.

The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact. As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.

Id. at 247–48, 106 S.Ct. 2505. To present a "genuine" issue of material fact, there must be contradictory evidence "such that a reasonable jury could return a verdict for the non-moving party." Id. at 248, 106 S.Ct. 2505.

If the nonmoving party has failed to make a sufficient showing on an essential element of his case with respect to which he has the burden of proof at trial, then summary judgment is appropriate. Celotex , 477 U.S. at 322, 106 S.Ct. 2548. In such a situation, "there can be ‘no genuine issue as to any material fact,’ since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. at 322–23, 106 S.Ct. 2548 ; accord Goenaga v. March of Dimes Birth Defects Found. , 51 F.3d 14, 18 (2d Cir. 1995) (movant's burden satisfied if he can point to an absence of evidence to support an essential element of nonmoving party's claim). In short, if there is no genuine issue of material fact, summary judgment may enter. Celotex , 477 U.S. at 323, 106 S.Ct. 2548.

II. Background
A. Factual Background
1. The Property

In August 2001, Steve and his then-wife Erika acquired the property at 58 Lebanon Road, Bethany, CT 06524 (the "Property") for $349,000 by warranty deed. See 2001 Deed, Ex. B to Def.’s Mot. for Summ. J, Doc. No. 44-3. In November 2006, Steve executed a $400,000 mortgage secured by the Property in which he and Erika were the mortgagors and his mother, Liette, was the mortgagee. See 2006 Mortgage, Ex. C to Def.’s Mot. for Summ. J., Doc. No. 44-4. In 2012, Erika quit-claimed her interest in the Property to Steve. See 2012 Quitclaim Deed, Ex. D to Def.’s Mot. for Summ. J., Doc. No. 44-5. Steve thus owned an undivided interest in the Property. However, on March 14, 2016, Liette obtained an order of strict foreclosure against Steve, and title vested in Liette on May 6, 2016, at which point Liette owned an undivided interest in the Property. See 2016 Foreclosure, Ex. E to Def.’s Mot. for Summ. J., Doc. No. 44-6. On September 13, 2017, Liette sold her interest in the Property by warranty deed for $150,000. See 2017 Deed, Ex. F to Def.’s Mot. for Summ. J., Doc. No. 44-7. Thus, as of September 13, 2017, the Plaintiffs no longer had an ownership interest in the Property.

At the times relevant to this case, Steve used the Property as a second home. Liette lived in Palm Beach, Florida, and never used the Property; Steve's primary residence was in West Harrison, New York. See Def.’s Local Rule 56(a)1 Stmnt. ("56(a)1 Stmnt."), Doc. No. 44-1, at ¶¶ 6, 30. Steve used and maintained the Property. See id. at ¶ 7. Most weekends, Steve went to the Property and usually stayed overnight. See id. at ¶ 31.

2. March 16, 2016: Steve Discovers the Loss

On March 16, 2016, Steve arrived at the Property and discovered that it was, essentially, ruined. See id. at ¶ 2. (I will refer to the damage that occurred at the Property as the "Loss.") Steve explained that when he arrived, he was unable to open the side door (where he usually entered) because the door was swollen shut. Examination Under Oath, Ex. G to Def.’s Mot. for Summ. J. ("Steve's EUO"), Doc. No. 44-8, at 72:15–73:4. Although the Property's exterior appeared unchanged, Steve observed condensation on the windows. See id. at 74:11–21. When Steve entered, he reported that the Property was a "hot house" and looked like "a greenhouse" with "water everywhere." Id. at 76:13–14. The Property's living area had "water dripping down the back of the wall" and "water on the floor." Id. at 77:3–10.

3. The Policy

At the time of the Loss, the Plaintiffs were insureds on the Policy, a homeowners’ insurance policy issued by Great Lakes. See 56(a)1 Stmnt., Doc. No. 44-1, at ¶ 4; Policy, Ex. A to Badders Aff. (the "Policy"), Doc. No. 44-26, at 3. The Policy was an "all risk" Policy that protected against every kind of loss not explicitly excluded. See Pl.’s Local Rule 56(a)2 Stmnt. of Add'l Facts ("56(a)2 Stmnt."), Doc. No. 53-1, at 21 (¶ 9); Badders Depo. Tr., Ex. P to Def.’s Mot. for Summ. J., Doc. No. 44-17, at 16:19–21. The Policy contained a "Freezing Exclusion" that explained that Great Lakes did not insure

for loss ... [c]aused by ... [f]reezing of a plumbing, heating, air conditioning or automatic fire protective sprinkler system or of a household appliance system or of a household appliance, or by discharge, leaking or overflow from within the system or appliance caused by freezing.

Policy, Doc. No. 44-26, at 29–30. However, two exceptions applied to the Freezing Exclusion:

This provision does not apply if you have used reasonable care to: (a) Maintain heat in the building; or (b) Shut off the water supply and drain all systems and appliances of water.

Id. at 30. Only the first exception (the "Heat Exception") is relevant here.1 The Policy also included a "Mold Exclusion" that read, in relevant part:

Notwithstanding any other provision in this Policy, there is no coverage ... for any loss or damage involving in any way the actual or potential presence of mold, mildew or fungi of any kind whatsoever, whether or not directly or indirectly caused by or resulting from an insured peril.

Id. at 8. In addition, the Policy also excluded coverage for loss caused by mold (subject to an exception not applicable here). See id. at 30.

4. Brief Overview: Different Sides to the Story

Steve claims he was shocked when he saw the Property on March 16, 2016. Steve maintains that he had been there one month before—from about February 11 to 14, see 56(a)1 Stmnt., Doc. No. 44-1, at ¶¶ 32–33—and the Property looked perfectly fine. Moreover, Steve claims that he had been at the Property twice in early December 2015 and once in January 2016, and the Property seemed fine then, too. Steve believes that the Loss occurred due to a pipe bursting sometime between February 15 and March 16. Steve does not believe that the pipe necessarily burst due to freezing.

Great Lakes believes that the Loss was plainly due to a freeze-up that caused a pipe to rupture. Whenever Steve was last at the...

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