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Connecticut Courts Rule on Coverage for Crumbling Foundation Cases

Blogs, Insurance Coverage

The state of Connecticut is in the midst of a wave of litigation concerning insurance coverage for losses from the widespread use of faulty concrete supplied by J.J. Mottes Company to build homes in Tolland County during the 1980s and 90s. The trial courts are starting to issue rulings on some of the cases. In two of them, Metsack v. Liberty Mut. Fire Ins. Co., No. 3:14-CV-01150, 2017 WL 706599 (D. Conn. Feb. 21, 2017) and Roy v. Liberty Mut. Fire Ins. Co., No. 3:13-CV-00435-SRU (Conn. Super. Ct. Feb. 22, 2017), the homeowners’ policies at issue provided coverage in the event of the “collapse” of a home but failed to define that term. In those cases, the courts held that a collapse occurs when there is a “substantial impairment to the structural integrity of the home,” which is the definition adopted by the Connecticut Supreme Court in 1987 in Beach v. Middlesex Mut. Ins. Co., 205 Conn. 246, 532 (1987). The courts declined to adopt a narrower definition of collapse that would require plaintiffs to show that the damage had rendered the building unfit or unsafe. Cf. Queen Ann Park Homeowners Ass’n v. State Farm Fire and Cas. Co., 352 P.3d 790, 791 (Wash. 2015). In the course of the rulings, the courts also rejected the insurers’ arguments that the loss fell under a policy exclusion for damage done to the home’s “foundation and / or retaining walls,” holding that those terms are ambiguous and do not necessarily include the basement walls at issue.

In the third case, Jemiola v. Hartford Cas. Ins. Co., No. CV-15-6008837-S (Conn. Super. Ct. Mar. 2, 2017), the plaintiff had a homeowners’ policy with Hartford Mutual Casualty Company from 1986 to 2014. Prior to 2005, the policy did not define the term “collapse.” The Court held that the common law “substantial impairment” definition applied during that period. The plaintiff’s expert witness testified that although deterioration of the faulty concrete begins immediately upon pouring, a home does not become “substantially impaired” until cracking materializes. The plaintiff first observed cracking in her basement walls in the fall of 2006. Thus, the Court found that she could not create a genuine issue of material fact as to whether her home was “substantially impaired” before the policy was amended on March 2005. Under the new language, the operative language defined collapse as “an abrupt falling down or caving in of a building . . . with the result that the building cannot be occupied for its current intended purpose.” The Court rejected plaintiff’s argument that the term “abrupt” was ambiguous, and granted Hartford Mutual’s motion for summary judgment on the grounds that (1) the damage had occurred over a number of years, rather than suddenly, and (2) the home was not yet uninhabitable.