Liston-Smith v. Csaa Fire & Cas. Ins. Co.
287 F. Supp. 3d 153
D. Conn.2017Background
- Plaintiffs Lynne Liston‑Smith and John Smith own a home in Tolland, CT insured by CSAA and sued after discovering progressive cracking in basement/foundation concrete caused by a chemical reaction.
- Engineer William Neal concluded the concrete has an inherent chemical defect causing progressive deterioration and recommended foundation replacement; walls remain standing and the house is habitable.
- Plaintiffs submitted a claim (Sept. 2015); CSAA denied coverage (Oct. 2015). Plaintiffs sued for breach of contract and CUIPA/CUTPA; the implied‑covenant claim was previously dismissed.
- The CSAA policy is an all‑risk form but contains express exclusions (e.g., wear and tear, latent defect, settling/shrinking/expansion/cracking of foundations/walls, faulty materials) and an Additional Coverage for collapse defined as an "abrupt falling down or caving in."
- CSAA moved for summary judgment; the court granted it, holding the policy’s collapse provision and specific exclusions bar recovery and that CUIPA/CUTPA claims fail where denial of coverage is proper and plaintiffs showed no general business practice or proximate harm from an alleged cancellation threat.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the policy's Collapse Additional Coverage covers the damage | Collapse provision is ambiguous and should cover substantial structural impairment, not only abrupt collapse | Collapse defined unambiguously as "abrupt falling down or caving in"; no such event occurred | Court: No coverage — collapse requires abrupt falling/caving in; walls standing and house inhabitable. |
| Whether the chemical reaction itself is a "direct physical loss" | The chemical reaction is itself a covered loss (and "risk" language broadens coverage) | A chemical reaction is the cause, not the compensable loss; only resulting physical damage can be covered and exclusions apply | Court: Chemical reaction is a process/cause, not a direct physical loss; not covered. |
| Whether express policy exclusions (latent defect, wear/deterioration, cracking/expansion, faulty materials) bar recovery | Exclusions do not defeat coverage or are inapplicable | Exclusions expressly bar losses from latent defects, deterioration, cracking/expansion of foundations/walls, and faulty materials used in construction | Court: Exclusions apply and bar plaintiffs' claim. |
| Whether CUIPA/CUTPA claim survives given denial of coverage and alleged wrongful conduct | CSAA acted unfairly, threatened cancellation, and shared information with ISO, supporting CUIPA/CUTPA | Denial of coverage was lawful under policy language; plaintiffs offer no evidence of a general business practice or proximate harm from cancellation threat | Court: CUIPA/CUTPA fails — denial was proper (no coverage) and plaintiffs show neither a general practice nor proximate damages. |
Key Cases Cited
- Lexington Ins. Co. v. Lexington Healthcare Grp., 311 Conn. 29 (court determines construction of insurance contract is a question of law)
- Zulick v. Patrons Mut. Ins. Co., 287 Conn. 367 (ambiguities in an insurance policy are construed against the insurer)
- Beach v. Middlesex Mut. Assur. Co., 205 Conn. 246 (interpretation of collapse provisions may cover substantial structural impairment where policy language does not require abrupt collapse)
- Dalton v. Harleysville Worcester Mut., 557 F.3d 88 (2d Cir.) (collapse/structural impairment analysis under policy language)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard)