Faced with unclear case law and the prospect of 34,000 homes across Connecticut suffering from crumbling concrete, a federal judge has asked the state’s highest court to further define “collapse” in order to help determine whether homeowners’ insurance policies will apply.
The ruling issued Monday by U.S. District Judge Stefan Underhill in Karas v. Liberty Insurance may finally clear up a thorny question of insurance law that, he said, “raises important issues of public policy, and is likely—indeed, almost certain—to recur.”
For years, homeowners across nearly 20 towns in northeastern Connecticut claim they have been shocked and then walloped financially when they’ve realized that their houses’ foundations, poured with troublesome concrete supplied by the J.J. Mottes Concrete Co., are cracking beneath them.
The result over the last decade or more, according to Underhill’s opinion and multiple New York Times reports, is that the homeowners have made claims under their insurance policies for reimbursement of repairs that sometimes cost hundreds of thousands of dollars. Insurers, often citing policy provisions that cover only sudden or abrupt collapses, have generally denied the claims.
A rash of homeowner lawsuits in both federal and state courts in Connecticut has followed.
Underhill, explaining himself in a nine-page order that certifies a question on collapse for the Connecticut Supreme Court, wrote that he had declined to certify state law questions to the high court in previous concrete-collapse cases because “sufficient precedents exist[ed] for me to make a prediction of how the [Connecticut Supreme Court] would decide the question,” quoting Roberts v. Liberty Mut. Fire Ins., 264 F. Supp. 3d 394, 402 (D. Conn. 2017).
“But in light of the frequency with which the collapse issue has recurred,” he wrote, “I now conclude that certification would save time, energy, and resources ’by enabling the state’s highest court to provide a ‘conclusive’ interpretation of ‘substantial impairment of structural integrity,’” citing Arizonans for Official English v. Arizona, 520 U.S. 43, 77 (1997).
He also noted that “determining the extent to which the substantial loss should fall on homeowners or on their insurers entails ‘value judgments and important public policy choices that the [Connecticut Supreme Court] is better situated … to make,’” quoting Beck Chevrolet v. GM, 787 F.3d 663, 682 (2d Cir. 2015).
It is the phrase “substantial impairment of structural integrity” that is at the heart of the question Underhill chose to certify to the state high court.
The precise question reads: “What constitutes a ‘substantial impairment of structural integrity’ for purposes of applying the ‘collapse’ provision of this homeowners’ insurance policy?”
According to Underhill, the most applicable precedent, Beach v. Middlesex Mutual Assurance, 205 Conn. 246 (1987), “arguably provides insufficient guidance” regarding the key question of how to define “substantial impairment of structural integrity” in the context of a collapse, when the term “collapse” is left undefined by the insurance policy at issue.
Moreover, the judge wrote, “No Connecticut appellate decision has squarely applied Beach and arrived at a definition of ‘substantial impairment of structural integrity.’”
He also noted that Beach “specifically rejected the insurer’s contention that ‘collapse … unambiguously contemplates a sudden and complete falling in of a structure,’” but the court did not “further define the standard of ‘substantial impairment of structural integrity,’” quoting Beach, 205 Conn. 246, 252.
In the case before Underhill, homeowners Steven and Gail Karas claim they discovered in 2013 that their basement walls were cracking and deteriorating. Their house had been built with J.J. Mottes Concrete Co. concrete that contained a stone aggregate with significant amounts of pyrrhotite, a ferrous mineral that reacts with water, oxygen, and concrete paste to form secondary minerals that expand to crack and destabilize the concrete over time, according to Underhill.
The use of pyrrhotite mineral in residential-foundation construction had never been prohibited or limited under state codes, said a 2016 New York Times article citing a state attorney general’s office report.
After the Karases made a claim under their Liberty Insurance policy in 2013, the insurance company denied it the same day, stating that the loss detailed was “deterioration” that wasn’t covered by the policy, Underhill wrote.
In December 2013, the Karases sued Liberty, alleging that their loss was a “collapse” under the guidance given in Beach. As part of the suit, they alleged that Liberty had breached its insurance contract with them.
Underhill noted that in 2017 Liberty had moved to certify several questions arising from the suit to the Connecticut Supreme Court, and that the Karases had opposed certification. They later dropped their opposition after learning that U.S. District Judge Robert Chatigny was likely to certify questions in another concrete collapse case, Underhill said.
Michael Parker of the Law Office of Michael D. Parker in Springfield represented the Karases and could not be reached for comment. Nor could Philip Newbury Jr., a partner at Howd & Ludorf in Hartford, who represented Liberty.
Underhill further wrote in the order that certification “is warranted because the concrete collapse cases ‘are plainly of great importance to the State,’” quoting World Trade Ctr. Lower Manhattan Disaster Site Litig., 846 F.3d 58, 69 (2d Cir. 2017).