Federal judge dismisses cracking foundation lawsuit against Allstate

In a blow to an estimated 35,000-plus Connecticut households facing crumbling foundations due to defective concrete, a federal judge has granted a motion to dismiss a suit brought by a Tolland family against Allstate, marking the 14th of 15 cases in which the insurer has prevailed.

Deterioration of concrete foundations caused by pyrrhotite

Insurance companies have been increasingly hit with lawsuits in recent years since it came to light that homes in the northeastern area of the state are facing potential collapse due to the presence of a naturally occurring iron sulfide originating from a quarry in Willington. The mineral — pyrrhotite — causes the gradual deterioration of concrete when exposed to water and oxygen.

Related: Connecticut court’s concrete ruling could impact thousands

In only one case — Maki v. Allstate — did U.S. District Judge Warren Eginton rule the plaintiff had alleged sufficient facts to avoid dismissal. That case is pending.

In the latest case in Tolland, one of the town at the epicenter of the problem, Richard and Denise Hyde maintained in federal court that Allstate should be held liable for concrete decay that affected their basement walls. The couple argued that, in several cases, Allstate’s policy language was ambiguous and, therefore, the insurance company should have to pay for the damages.

Homeowners did not prove case

But Connecticut U.S. District Judge Vanessa Bryant ruled Tuesday that the Hydes did not prove their case and granted Allstate’s motion to dismiss. The family’s lawsuit against Liberty Insurance Corp. moved forward.

The Hydes have lived on Willow Creek Drive in Tolland since 1998, a year after they purchased their property. In the fall of 2016, in anticipation of selling their home and suspecting decay, the Hydes hired an engineer to examine the home. The engineer reported the property had been constructed with defective concrete, marked by patterned cracking in the basement walls. The Hydes filed a claim with Allstate in May 2017, but was denied coverage in a letter four months later.

In denying the Hydes’ claim that language in the policy is ambiguous, Bryant wrote: “A contract is unambiguous when its language is clear and conveys a definite and precise intent. … This court will not torture words to impart ambiguity where ordinary meaning leaves no room for ambiguity. The mere facts that the parties advance different interpretations of the language in question does not necessitate a conclusion that the language is ambiguous.”

Not ‘sudden and accidental’

Allstate maintained, and Bryant agreed, that the loss the Hydes claimed “is not covered by the plain language of the policies.” The insurance company argued that the restriction of coverage to “sudden and accidental” losses renders gradual concrete decay outside the policy’s coverage. Allstate maintained the problem with the Hydes’ basement walls was not sudden and accidental and did not constitute an entire collapse, something that would have been covered.

In addition, Allstate argued the Hydes’ claimed loss falls into multiple policy exclusions, which Bryant agreed includes exclusions for loss related to cracking walls, rust and defective construction materials.

Bryant wrote that “the plain language of the policies dictates that is it the ‘collapse’ which ‘must be sudden,’ not any ‘sudden events’ that may eventually lead to the collapse.”

Cost estimates: $150,00 to $250,000 per home

According to the Connecticut Department of Housing, the damage from the concrete is irreversible. The department’s website indicates the most effective repair is to replace the existing foundation, with cost estimates ranging between $150,000 and $250,000 per home.

In a separate case decided Nov. 27, U.S. District Judge Michael Shea also relied on the unambiguous-language determination to dismiss a case against Nationwide Property & Casualty Insurance Co., brought by Union, Connecticut, residents Lawrence and Karen Cockill. Shea wrote that many exclusions in the Cockills’ policy “are broad enough to include chemical reactions,” including “wear and tear,” “deterioration,” “inherent vice,” “latent defect,” “rust” and “cracking.”

Shea added that the Cockillls’ policy “states that repairs to prevent further damage are covered ‘if the peril causing the loss is covered.’ ECF No. 15-2 at 16. In this case, because the “peril[s] causing the loss” — the alleged chemical reaction and cracking — are not covered, there is no additional coverage for replacing the concrete.”

MOU with Travelers to provide policyholder assistance

Noting that thousands of families are facing the threat of crumbling foundations along with a mounting precedent of dismissed lawsuits, Gov. Dannel Malloy and state Attorney General George Jepsen announced in a joint release Thursday that state has entered into a memorandum of understanding with Hartford-based Travelers Companies to provide assistance to current and former Travelers policyholders who are seeking financial assistance to remediate crumbling  foundations.

Under the agreement, Travelers will establish and administer the voluntary Travelers Benefit Program and commit $5 million to the program in concert with an assistance program launching through the Connecticut Foundations Solutions Indemnity Co.

A decision on whether to appeal the Hyde v. Allstate ruling to the U.S. Court of Appeals for the Second Circuit in New York City will be made by the Hydes’ attorneys, Lindsay Britton and Jeffrey Lindequist, both of Springfield, Massachusetts-based Law Office of Michael D. Parker. Neither attorney responded to a request for comment Thursday.

Robinson & Cole attorneys Raymond Demeo and Jessica Hamilton, who represented Allstate, declined to comment. Allstate’s media relations team for the Connecticut region did not respond to a request for comment.

Related: Bill requiring insurance coverage for foundation collapse crumbles in Connecticut legislature