In yet another collapse case from Connecticut, the federal district court denied the insurer's motion to dismiss. Maki v. Allstate Ins. Co., 2018 U.S. Dist. LEXIS 102708 (D. Conn. June 20, 2018).
In February 2016, the insureds noticed a series of cracks throughout the basement walls of their home. The insureds believed the problem was due to tainted concrete, likely obtained from the J.J. Mottes Concrete Company, which had caused similar problems in homes throughout Connecticut. A chemical compound in the Mottes concrete would eventually cause the home to cave in on itself, and there was no known method to prevent the continuing deterioration.
The insureds sued Allstate when coverage was denied. Allstate filed a motion to dismiss.
The policy covered collapse, which required,
a) the entire collapsed 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).
For coverage to apply, the collapsed 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:
, , ,
b) hidden decay of the building structure;
. . .
f) defective methods or materials used in construction, repair, remodeling or renovation. . .
Allstate argued that "sudden" meant a temporal abruptness of collapse that the case here did not present. But the policy covered collapse caused by "hidden decay" and "defective methods or materials used on construction," both of which were alleged here. Decay typically consisted of slow progressive decline, so the policy language was arguably inconsistent with any temporal abruptness requirement. All of the covered, gradual causes of collapse included thein policy necessarily occurred slowly until such time as there was a sudden revelation of a catastrophic nature. Here, the abrupt event at issued was the exposure of cracks demonstrating substantial impairment to the structural integrity of the home.
The court found that regardless of the exact scenario, homeowners should not have to wait for their home to fall to the ground to be eligible for explicitly included collapse coverage. The policy did not require a sudden "falling down." It required a sudden collapse, which the insureds had adequately alleged in their complaint.
Regarding the exclusion for defective construction materials, the additional protection coverage for collapsed superseded any contradictory general exclusions, and the policy could reasonably be understood to have contemplated coverage for a "collapse" that followed consequentially from otherwise excluded activity.
Allstate also argued that the building must entirely collapse. But "collapse" was sufficiently ambiguous to include coverage for any substantial impairment of the structural integrity of a building under Connecticut law. Beach v. Middlesex Mut. Assur. Co., 205 Conn. 246. Here, the insured alleged substantial impairment of the structural integrity of the home. The entire collapse of a home's foundation could be reasonably understood to be an entire collapse of part of the covered building structure in the sense that the foundation was completely, without limitation, suffering from the substantial impairment to its structural integrity.
The court was aware that in Karas v. Liberty Ins. Co., 2018 U.S. Dist. LEXIS 71844 (D. Conn. Apr. 30, 2018) [post here], a certified question had been posed to the Connecticut Supreme Court to determine what constitutes "substantial impairment of structural integrity" for purposes of applying the collapse provision to homeowners' policies. Depending on the answer to the certified question, substantial impairment of the structural integrity of the insured's home may have existed when the insured first noticed a series of cracks throughout their basement walls in February 2016.
Therefore, Allstate's motion to dismiss was denied without prejudice for renewal after resolution by the Connecticut Supreme Court of the definition of "collapse" within a homeowners' policy.