The federal district court largely denied the insurer's motion for summary judgment seeking a judgment of no coverage for snow removal and related property damage. Thurston Foods v. Wausau Bus. Ins. Co., 2017 U.S. Dist. LEXIS 74935 (D. Conn. May 17, 2017).
The insured was a food distributor with a warehouse that was constructed in 1990. It contained an industrial freezer. The freezer used a ventilation system under the freezer floor. In 2003, the insured constructed an addition to the freezer and expanded the ventilation system to include the area under the addition.
In January 2011, snow and ice accumulated on the roof of the warehouse. The insured noticed water leaking in to the interior of the warehouse. Snow was removed from the roof and deposited along the perimeter of the building.
On February 16, 2011, the insured notified Wausau of its claims arising form snow removal, damage to the warehouse roof and damage to interior offices. Wausau inspected the warehouse the next day, but did not observe any damage except for a possible nine-square-foot area near the gutter line over the warehouse. On March 15, 2011, Wausau advised that damages related to the snow load claim did not exceed the $5,000 deductible. The insured, on the other hand, valued the claim at nearly $200,000.
The policy terminated on August 1, 2011. In January 2012, forklift operators in the warehouse complained about cracking and heaving to the freezer floor. Notice of the freezer floor damage was given to Wausau on February 14, 2012. The insured's expert stated that the ventilation pipes were blocked by both snow and ice on the roof and existing snow on the ground during the winter of 2011. The blockage of the ventilation system during the winter of 2011 caused ice to form in the ventilation pipes, and the ice formation under the floor eventually caused the freezer floor to crack and heave in January 2012. Wausau denied this portion of the claim on November 17, 2014.
The insured sued for breach of the policy and bad faith. Both parties moved for summary judgment. On the snow removal claim, Wausau argued that maintenance costs were not covered. The insured sought costs to repair the roof that may have been damaged by the snow removal and replacement of the damaged tiles and undamaged tiles that matched the new tiles. Wausau submitted these costs were not covered because the roof damage occurred during the snow removal. The court determined there was an issue of fact as to whether the snow removal constituted a response to prevent further damage. Therefore, Wausau's motion for summary judgment on the snow removal and interior water damage claim was denied.
The parties disagreed on whether the freezer floor damage fell within the policy period. The insured argued that its expert's testimony raised an issue of fact concerning the cause and occurrence of the heaving of the freezer floor. Wausau's expert opined that the damaged to the floor could have commenced up to one year to the floor actually heaving. This also created an issue of fact that could not be resolved on summary judgment.
As to the earth movement exclusion, it was only triggered by conditions concerning soil or water action under the "ground surface." It was unclear whether freezing within an above-grade ventilation system that damaged the freezer floor would fall within the exclusion. Granting Wausau summary judgment on the applicability of the exclusion would also be inappropriate.
The exclusion for "settling, cracking, shrinking or expansion" was applicable here, however. The spider cracks within the freezer floor fell within the plain meaning of the exclusion. To the extent that the insured sought to recover for cracking to the floor, such coverage was excluded and Wausau was entitled to summary judgment on this issue.
Finally, the court denied Wausau's motion in regards to the bad faith claim. If the jury found for the insured on its coverage claims, a reasonable jury could find that Wausau acted in bad faith in denying such coverage.