Authored by: Joseph Ciollo
U.S. District Court – Property Loss – Surface Water Exclusion
In Elmwood Automotive, LLC v. United Ohio Insurance Company, the plaintiff owned property that was damaged after a nearby water main broke under a roadway, causing water to rise to the surface and flow down the road onto the plaintiff’s property. The plaintiff presented a claim to the defendant, which denied the claim on the grounds that coverage for the claimed damage was excluded as damage caused by “surface water” under the applicable insurance policy. The defendant filed a motion for summary judgment on the basis of the coverage exclusion. The plaintiff argued that “surface water,” as commonly used, connotes natural rain or runoff water that accumulates on the ground, not non-naturally occurring water arising from a water main break. In support of the argument, the plaintiff quoted several dictionaries and treatises suggesting that “surface water” is water that has accumulated on the surface of the earth due to naturally occurring events such as rain or snow. The Court, however, was not convinced that the definitions the plaintiff provided establish that “surface water” is exclusively the result of naturally occurring water accumulation. The Court noted that even if the definitions the plaintiff cited did establish that surface water arises only from naturally accumulated water, the policy clearly provided that it is not so limited. Indeed, the policy clarified that the exclusionary clause “applies regardless [of] whether [the surface water] is caused by an act of nature or is otherwise caused.” To illustrate this point, the policy provided the following example: “the situation where a dam, levee, seawall or other boundary or containment system fails in whole or in part, for any reason, to contain the water.” This example suggested that “surface water” includes water that is uncontained on the surface—whether that water originates from natural sources or the failure of “a dam, levee, seawall or other boundary or containment system” such as a pipe. Similar to a pipe, a dam, levee and seawall are all man-made containment systems. According to the Court, this clause reinforces that so long as water is lying uncontained on the surface of the earth, it is considered “surface water” whether its most recent identifiable source is natural, such as rain, or a containment system, such as a pipe or an unknown source. The Court also rejected the plaintiff’s reliance on other cases which analyzed policy language devoid of the language contained in the policy at issue in the present case. Finally, the Court rejected the plaintiff’s argument that the policy’s enumeration of “a dam, levee, seawall or other boundary or containment system” should be read to mean only those containment systems that store natural reserves of water or restrain natural masses of water like reservoirs, rivers, or the sea. The plaintiff provided no evidence that the ordinary meaning of “containment system” does not include water mains. The motion for summary judgment was granted.
U.S. District Court – Property Loss – Earth Movement And Settling Exclusions
In Dalmac Realty, LLC v. Scottsdale Insurance Company, the plaintiff asserted that the defendant improperly denied it insurance coverage for damage sustained to its property after a water line burst, resulting in the collapse of a main floor joist and a sudden settling of the building. The plaintiff submitted claims for both collapse damage and loss of business income and extra expenses as a result of the city condemning the building. The defendant retained an engineering expert who concluded that that soil consolidation was the cause of the damage. The defendant denied the claims on the basis that the damage was caused by soil consolidation—an excluded peril under the insurance policy. The denial letter cited to the policy’s earth movement exclusion. Despite the denial of the property claim, the defendant issued payment to the plaintiff in the amount of $3,667.68. The face of the check provided: “Full & Final Release of Any and All Property Damage Claims—Residential Tenant Property Damage Claims,” and a corresponding letter explained that the payment was related to the plaintiff’s request for coverage under the Commercial General Liability coverage of the policy. The defendant filed a motion for summary judgment on the basis of two coverage exclusions. The Court found that the defendant met its burden of proving that the earth movement exclusion applied to exempt the plaintiff’s claims from coverage, and the plaintiff did not demonstrate that any exceptions apply to restore coverage or otherwise rebut the defendant’s showing. Of note, the plaintiff’s own expert found that the settlement of the main columns in the basement was the result of soil consolidation beneath the interior support posts due to excessive moisture. The plaintiff argued that a genuine dispute of fact existed as to the cause of the soil consolidation. However, the Court found the argument to be unavailing, as the policy’s “anti-concurrent clause” rendered any alternative theory or contributing source immaterial. Based on the application of the earth movement exclusion alone, the defendant was entitled to judgment as a matter of law. The Court also found that the plaintiff’s claims were barred by the policy’s settling exclusion, in light of undisputed evidence that settling occurred at the plaintiff’s building following a water leak. The application of the settling exclusion provided further grounds to enter judgment as a matter of law for the defendant. Finally, the Court rejected the plaintiff’s argument that the aforementioned payment under the Commercial General Liability coverage of the policy constituted an acceptance of the property claims. The Court explained that said payment was issued to resolve third-party residential claims, and that in light of the defendant’s express denial of the property claims, no reasonable factfinder could conclude that the check was issued to plaintiff to resolve its property damage claims and thus constituted acceptance of those claims. The motion for summary judgment was granted.
Superior Court – Extracontractual Claims – Motion to Strike
In Reyes-Martinez v. State Farm Mutual Automobile Insurance Company, the plaintiff was injured in a motor vehicle accident and carried Underinsured Motorist (“UIM”) coverage with the defendant. The plaintiff filed a five-count complaint alleging: 1) UIM coverage; 2) breach of contract; 3) bad faith breach of contract; 4) violations of the Connecticut Unfair Insurance Practices Act (“CUIPA”) and the Connecticut Unfair Trade Practices Act (“CUTPA”); and 5) intentional infliction of emotional distress. The defendant filed a motion to strike as to all counts, arguing that none of them are sufficiently pleaded because the allegations are entirely conclusory and fail to plead factual allegations. Additionally, the defendant argued that count four was not sufficiently pleaded because CUIPA does not provide for a private cause of action. The Court denied the motion as to counts one and two, finding that the plaintiff had sufficiently pleaded the elements of those claims. The Court granted the motion as to count three because the plaintiff failed to specifically allege that the defendant acted with a dishonest purpose or engaged in a series or pattern of misconduct rising to the level of bad faith. Moreover, the plaintiff did not set forth sufficient allegations from which bad faith could be reasonably inferred. The allegations of count three were conclusory statements without any factual allegations to support the assertions. The Court granted the motion as to count four upon determining that the plaintiff simply quoted statutory language from CUIPA and did not allege facts that support the conclusion that the defendant engaged in conduct which violated CUIPA. Additionally, the plaintiff did not allege that the defendant engaged in improper conduct beyond the plaintiff’s individual claim. The failure to sufficiently plead a CUIPA claim was therefore fatal to the CUTPA claim. The Court granted the motion as to count five because the plaintiff failed to allege actions by the defendant which a reasonable fact finder could find extreme or outrageous. In addition, the plaintiff did not allege that the emotional distress sustained by the plaintiff was severe, nor did she allege any facts supporting an inference that the distress was severe.
