Terraine McCants v. State Farm Fire and Casualty Company (2014)

MEMORANDUM OF DECISION

The central issue in this case is whether the defendant, State Farm Fire and Casualty Company, breached its contract when it denied the insurance claim of the plaintiff, Terraine McCants, after her home was destroyed by fire on April 19, 2009.   The case was tried to the court.   For the following reasons, the court renders judgment for the plaintiff and against the defendant and awards damages in the amount of $412,389.30

Following pretrial proceedings, the plaintiff's only remaining claim is one count for breach of contract See Plaintiff's Second Revised Complaint, First Count dated June 6, 2011.  (Doc. No. 114.00) In response, the defendant has filed an answer which essentially denies liability, and it sets forth four special defenses.   In the First Special Defense, the defendant asserts that the plaintiff's claim is barred because the plaintiff did not reside at the insured location at the time of the loss.   The Second Special Defense asserts that the plaintiff's claim is barred by the concealment or fraud provisions of the policy.   The Third Special Defense contends that any recovery is limited by the coverage terms of the policy.   The Fourth Special Defense is that any recovery is limited by the loss settlement terms of the policy.   Plaintiff replies with a general denial of the special defenses.

The matter was tried to the court on October 29, November 7 and 8, 2013.   The court heard the testimony of the following witnesses Terraine McCants, plaintiff, Kingzetta Rose, plaintiff's niece, Mary Perry, plaintiff's mother;  Deborah McCants, plaintiff's sister;  Andrea Greene, plaintiff's niece, Robert G. Stoddard, Jr., Special Investigator for the defendant insurance company;  Sean Guinan, licensed public adjuster and Douglas Krenz, plaintiff's expert, insurance policies.   It has also reviewed the subject insurance policy, correspondence, numerous photographs of the scene, damage estimates, transcripts of statements and other reports and records that were admitted into evidence.   Counsel for the parties also supplied the court with briefs and reply briefs.

I

The court finds the facts as follows:  The defendant issued a homeowner's insurance policy to the plaintiff, bearing policy number 07–BA–F980–7 with the pertinent effective dates from November 29, 2008 to November 29, 2009.   The insured premises under the policy was 197 Bond Street, Hartford, Connecticut.

The plaintiff has been the sole owner of the property since 1995.   It was a three-family home.   The plaintiff paid all premiums due and owing on the policy.   While the policy was in effect, a fire loss occurred on April 19, 2009.   The fire damage was extensive.

On the day of the fire, the plaintiff was approached by an independent adjuster who offered to assist her in documenting the damage and helping her file an insurance claim, in exchange for 10 percent of her recovery.   She signed a contract with the independent adjuster on April 19, 2009, then rescinded it, then signed again on April 24, 2009.

With the assistance of the independent adjuster, the plaintiff filed a timely claim, and a claims adjuster for the defendant responded.   The matter was referred to a special investigator due to the fact that there were issues which would require special factual investigation.   Particular issues concerned the cause of the fire, the extensive loss history of the plaintiff, and a question concerning the bona fide residency of the plaintiff.

The special investigator responded promptly and began interviewing the witnesses and collecting records.   In particular, he interviewed the plaintiff on April 30, 2009.   He also interviewed the plaintiff's mother, Mary Perry, who lived on the first floor of the home, the plaintiff's niece, Kyanna Brown, who lived on the second floor with her family;  and the plaintiff's niece, Kingzetta Rose, who lived with her family at 107 Folly Brook Boulevard in Wethersfield, Connecticut.

The investigation determined that this was a “set fire,” but the plaintiff was not accused of being culpable.   In fact, criminal charges have yet to be brought in the matter and the plaintiff is not a suspect.   It was also documented that the plaintiff had made several other insurance claims over the years with other insurance companies, but those issues were not found to be disqualifying.   The investigation ultimately focused on the residency issue because, shortly after the fire, the plaintiff had made statements that she was not living at 197 Bond Street at the time of the fire.

Residency was an important issue because this was a homeowner's policy that only covered property identified on the declarations page as the residence premises, which is defined as “where you reside.”   The policy was for 197 Bond Street, Hartford, Connecticut.   The policy provided, in pertinent parts, as follows:

DEFINITIONS

“You” and “your” mean the “named insured” shown in the Declarations.   Your spouse is included if a resident of your household.  “We,” “us” and “our” mean the Company shown in the Declarations.

Certain words and phrases are defined as follows:

* * * *

5. “insured location” means:

a. the residence premises;

10. “residence premises” means:

a. the one, two, three or four-family dwelling, other structures and grounds;  or

b. that part of any other building;  where you reside and which is shown in the Declarations.

SECTION 1 COVERAGES

COVERAGE A—DWELLING

1.  Dwelling. We cover the dwelling used principally as a private residence on the residence premises shown in the Declarations.

Dwelling includes:

a.  Structures attached to the dwelling;  Materials and supplies located on or adjacent to the residence premises for use in the construction, alteration or repair of the dwelling or other structure on the residence premises;

b. foundation, floor slab and footing supporting the dwelling;  and c. wall-to-wall carpeting attached to the dwelling.

Homeowner's Policy, pp. 1–3 (emphasis added).

The investigator took statements, but there is no record that he ever explained the residency issue to any of the interviewees.   In her interview with the investigator, the plaintiff stated that she moved out of 197 Bond Street in October 2008 and moved to 107 Folly Brook Boulevard, Wethersfield.   She stated that she had not slept at 197 Bond Street since that time, and that she was in Wethersfield on the day of the fire.   She explained that she moved to Wethersfield to help her niece with the child care for her children, and so that another niece, who needed a place to stay with her children, could live at 197 Bond Street.   She also stated that she did not have any personal property at the house.   The interview was conducted in the presence of her independent adjuster, but the adjuster was not permitted to coach her during the interview.   Plaintiff's other witnesses made similar statements indicating that the plaintiff did not reside at the Bond Street home.

The investigator and his team, understandably, decided to deny the claim due to lack of residency.   Accordingly, by certified letter dated July 29, 2009, the defendant notified the plaintiff that her claim was being denied because, “State Farm Fire & Casualty Company's investigation had concluded that you do not reside in the home as is required by the policy of insurance.”   State Farm issued payment to the first mortgagee in the amount of $47,309.61, but has not issued any payments to the second mortgagee or to the plaintiff.   The plaintiff thence commenced the instant action for breach of contract.

The fire rendered the home uninhabitable.   The City of Hartford declared it to be unlit for human occupation.   The plaintiff was unable to repair the building due to lack of funds, and the city eventually filed an anti-blight lien against the property in the amount of $80,508.00.   Additionally, the plaintiff did not pay the real property taxes due on the property during the pendency of this lawsuit due to lack of funds.   The city is proceeding to sell the house at auction at a tax sale for collection of those unpaid taxes.

At trial, the plaintiff attempted to rehabilitate her testimony as to residency.   She testified that she lived, on and off, at Bond Street since she purchased it in 1995 due to various life events.   Nevertheless she insists that it was her permanent home, her share of the “American dream” of home ownership, and she has always returned to it.   She carried two mortgages on the house and was responsible for its maintenance, repair and tax obligations and she rented the units to family members when space was available.   Over the years, she arranged for repairs or replacement of the roof, siding, and windows and she had the house painted and the heating systems converted.

At one time she occupied the second floor, at other times she lived with her mother on the first floor.   She testified that she left the home in 2004 and moved to Florida for one year, after being laid off, and later moved to Maryland for one year, but lost a job again.   She next planned to move to North Carolina, but never did, and the people who were helping her move took, but did not return, her belongings.   So, she returned to Bond Street in December 2007 or January 2008.   In October 2008, she again found herself unemployed, so she volunteered to help with the child care for her niece, Kingzetta Rose, who lived in a two-bedroom apartment at 107 Folly Brook Boulevard in Wethersfield, Connecticut with her three young daughters.   She testified that she stayed with the children overnight while Kingzetta worked nights as a registered nurse, three or four nights per week.   She testified that she did not pay rent to stay in Wethersfield, did not contribute to the expenses there, and did not keep personal belongings there.   The plaintiff did not have a bedroom there, and the only personal belongings she had at the apartment were a change of clothes and a toothbrush.   When not watching the children in Wethersfield, she testified that stayed with her mother on the first floor at 197 Bond Street.   There, she had a bedroom with a bed, and she kept her clothes on the bed.   She also produced various records from various time periods showing that bills and correspondence were mailed to her at 197 Bond Street.   However, she had few personal belongings at Bond Street, other than clothes, and she admitted to using the Folly Brook address on her 2006, 2007 and 2008 tax returns.   In her 2008 tax return, she stated that she did not use the Bond Street property for more than the greater of 14 days or 10 percent of the total days rented at fair market value.   Also, in three leases for the apartments at 197 Bond Street signed on December 1, 2008, the plaintiff signed as landlord and designated 107 Folly Brook Boulevard, Wethersfield as her address.   The court also observes that when she first signed the contract with the independent adjuster, she gave as her address 107 Folly Brook Boulevard.   She then rescinded the contract.   She signed a new contract on April 24, 2009, this time giving her address as 197 Bond Street, after discussing the residency issue with the independent adjuster.

Various family members of the plaintiff testified at trial to support her on the residency issue, in contradiction to their earlier statements.   They now testified that the plaintiff only stayed overnight at Folly Brook Boulevard to babysit for her niece's children, and that she resided at 197 Bond Street.

Thus, the plaintiff's evidence concerning her residency was contradictory, confusing, suspicious and, therefore, ordinarily not credible—until it is put in perspective.   The court found the testimony of the witness, Kingzetta Rose, most illuminating, when she testified as follows:

I don't look at Bond Street as just one of your average typical residential homes.   Granted, everybody had their own primary residence, but Bond Street for me was different.   Even if you resided on the second floor, somebody—they might go to the third floor and stay over.   Or if you're on the first floor, you might go up to the second floor or the third floor.   Sometimes, you know, all three floors cook, you can go to either floor, you can have dinner.   Like I said, different people used to do hair.   You could go to either floor, you can get your hair done.   The way we refer as staying over, or, you know, living, we kind of see it as differently, because it was a family home, but it was my aunt's home, regardless of whether she slept on the roof, in the garage, outside, on the sidewalk, it was still her house regardless of where she resided.

Testimony of Kingzetta Rose, Tr. of 11/7/13, pp. 34–35.

In this light, the court finds it credible that the plaintiff shared her life with her family members at different locations at different times, paying no attention to the significance of her address identification or mail delivery, and displaying careless disregard for accuracy in legal matters generally.   The court attributes the prior contradictory testimony of the plaintiff and her witnesses to their lack of awareness or appreciation of the legal distinctions in issue and the consequences.   In sum, the court is persuaded that the plaintiff always maintained physical, financial and emotional ties to 197 Bond Street, and always returned to it because, relatively speaking, it was always her only permanent home.

Whether that suffices to qualify her for insurance payments depends on the terms of her policy.   The defendant argues that she is disqualified for two main reasons:  (1) lack of residency, and (2) concealment or fraud.   The issues are discussed seriatim.

II

A resolution of the contested claims in this matter requires the court to interpret the language of the insurance policy.   The rules of construction were recently summarized as follows:

“Interpretation of an insurance policy, like the interpretation of other written contracts, involves a determination of the intent of the parties as expressed by the language of the policy ․ Unlike certain other contracts, however, where absent statutory warranty or definitive contract language the intent of the parties and thus the meaning of the contract is a factual question subject to limited appellate review ․ construction of a contract of insurance presents a question of law for the court which this court reviews de novo.”  (Internal quotation marks omitted.)  Vitti v. Allstate Ins. Co., 245 Conn. 169, 174, 713 A.2d 1269 (1998).  “The Connecticut rule of construction of insurance policies is well settled.   If the terms of an insurance policy are of doubtful meaning, that permissible construction which is most favorable to the insured is to be adopted;  but if they are plain and unambiguous the established rules for the construction of contracts apply, the language, from which the intention of the parties is to be deduced, must be accorded its natural and ordinary meaning, and the courts cannot indulge in a forced construction ignoring provisions or so distorting them as to accord a meaning other than that evidently intended by the parties.”  (Internal quotation marks omitted.)  Id., 176.

Anastasia v. General Casualty Co. of Wisconsin, 307 Conn. 706, 711–12, 59 A.3d 207 (2013);  accord, Compassionate Care, Inc. v. Travelers Indemnity Co., 147 Conn.App. 380, 399–400 (2013).

The pertinent language of the policy with respect to the first issue, concerning residency, clearly requires that the insured premises be the “residence premises” of the insured identified in the declaration page of the policy, and the policy defines that as “where you reside.”   Policies with similar language have been found by other courts to be unambiguous and this court concurs.  “Where you reside” means where you are living, and when the policy holder moved and/or was living elsewhere, there was no coverage.   See, e.g., Afifi v. Standard Fire Insurance Co., Superior Court, judicial district of New Haven, Doc. No. NNH CV 11–6017083 (January 15, 2013, Wilson J.), Bolivar v. Blue Ridge Insurance Company, Superior Court, judicial district of Fairfield at Bridgeport, Doc. No. CV 98–0353522 (October 19, 1999, Skolnick, J.);   Sponzo v. Hartford Underwriters Insurance Group, Superior Court, judicial district of Hartford, Doc. No. CV 95–0543134 (March 15, 1996, Aurigemma, J.).   On the other hand, it has been observed that, as a general rule, a temporary absence does not affect the insurance contract, for terms like “occupied as a residence” and “occupied” do not require uninterrupted, continuous occupation.   6A Couch on Insurance 3d § 94:71 Further, it has been observed, generally, that “[a] person may also be a resident of more than one household for insurance purposes.”   Id., § 128:7.   Thus, it has been held that a policy, with language similar to that in the instant case, covers multiple, seasonal, part-time or weekend homes.   See Ehsan v. Ericson Agency, Inc., Superior Court, judicial district of Litchfield, Doc No. CV 01–0085772 (Frazzini, J., July 3, 2003).   It is well recognized in the law that a person may have more than one residence.   See Argent Mortgage Co., LLC v. Heurtas, 288 Conn 568, 578, 953 A.2d 868 (2008).   And, the fact that the occupant adopts, by preference or necessity, a transient lifestyle with minimal possessions, is not disqualifying.  “Courts have held that [a] householder need not necessarily have conventional, or, indeed, any furniture in a house to occupy it.   His presence in it for sleeping and eating and working purposes can literally constitute occupancy.   He can, if he will, sleep and eat on the floor or on improvised devices.”  (Citations omitted;  internal quotation marks omitted.)  Dean v. Tower Ins. Co., 19 N.Y.3d 704, 709, 979 N.E.2d 1143, 955 N.Y.S.2d 817 (2012).   The issue is, essentially, a factual one.   The decision depends on the particular factual circumstance and the credibility of the witnesses who testify.   Therefore, decisions by other courts that heard other witnesses and considered other facts are of little precedential value.   See, Griffith v. Security Ins. Co., 167 Conn 450, 458, 356 A.2d 94 (1975).

In the instant case, considering all of the facts, the court concludes that the property was the plaintiff's permanent home, although she lived, temporarily at other locations as her personal and financial circumstances required.   At the time of the fire, she was living at 197 Bond Street, although she also stayed overnight part of each week at her niece's apartment to help with child care.

Therefore, the court finds that the insured location was the residence premises of the plaintiff within the meaning of the policy.   It was where she resided within the meaning of the insurance policy.   Consequently, the plaintiff has proven that the failure of the defendant to pay her claim constituted a breach of contract, and the defendant's First Special Defense must fail.

III

The next issue, raised by the defendant in its Second Special Defense, is whether the policy is void due to alleged misrepresentations made by the plaintiff.   This defense rests on the concealment or fraud provision of the policy, which provided as follows:

This policy is void as to you and any other insured, if you or any other insured under this policy has intentionally concealed or misrepresented any material fact or circumstances relating to this insurance, whether before or after a loss.

Homeowner's Policy, p. 19.

Defendant alleges that the plaintiff transgressed this provision when she gave State Farm copies of three lease agreements for the apartments in the subject premises after the fire occurred.   It alleges that the lease agreements were requested by State Farm in part because, at that time, she was making a claim for loss of rents.   This constituted misrepresentation, the defendant alleges, because the leases were not copies of originals, but were re-created in the aftermath of the fire, and the plaintiff never disclosed that fact to State Farm.

“An insurer who raises this special defense [of concealment or misrepresentation] must prove only that the insured willfully concealed or misrepresented a material fact with the intention of deceiving the insurer.   Unlike a party asserting a cause of action for common-law fraud, an insurer who raises the special defense of concealment or misrepresentation does not have to prove that the insurer actually relied on the concealment or misrepresentation or that the insurer suffered injury ․ [I]n the case of an insurance contract, the consequence of the alleged concealment or misrepresentation is the forfeiture of a contractual benefit, and therefore the burden of proof normally applicable to contractual claims, the preponderance of the evidence standard, should control.”  (Citations omitted.)  Rego v. Connecticut Insurance Placement Facility, 219 Conn. 339, 346–47, 593 A.2d 491 (1991).   A misrepresentation that forfeits the contractual benefit under an insurance policy must generally concern a material misrepresentation of fact;  see Rego v. Connecticut Insurance Placement Facility, supra, 219 Conn 347;  not an unintentional mistake or opinion honestly entertained.  Davis–Scofield Co. v. Reliance Ins. Co., 109 Conn. 686, 689, 145 A. 42 (1929);  Aetna Casualty & Surety Co. v. Pizza Connection, Inc., 55 Conn.App. 488, 496, 740 A.2d 408 (1999).

The court is not persuaded as to this special defense.   First, the record does not establish that the plaintiff ever made a claim for lost rents.   There was only proof of a possibility that she might seek a claim loss of rents.   The record further reflects that the defendant asked the plaintiff if she had leases for the renters;  and, if so, the plaintiff was told the defendant needed to have copies of the leases.   The plaintiff testified that she did not have copies, as they were destroyed in the fire, so she supplied re-creations.   However, she did not explain that to the defendant.   That non-disclosure was certainly a misrepresentation of fact.   However, since there is no record that the plaintiff actually sought lost rental income in her claim, and since the plaintiff is not seeking lost rental income in this lawsuit, the court finds the misrepresentation to be not material.

IV

Having determined that the defendant breached its contract with the plaintiff, the next task for the court is to determine the damages for which the plaintiff is eligible.  “The rights of the parties to an insurance contract are determined at the time or moment loss is sustained and damages are measured as of the date of the breach.”  (Citations omitted.)  Rametta v. Stella, 214 Conn. 484, 492, 572 A.2d 978 (1990).  “The general rule in breach of contract cases is that the award of damages is designed to place the insured party, so far as can be done by money, in the same position as he would have been in had the contract been performed ․ Damages for breach of contract are to be determined as of the time of occurrence of the breach.”  (Citations omitted, internal quotation marks omitted.)  West Haven Sound Development Corp. v. West Haven, 207 Conn. 308, 317, 541 A.2d 858 (1988).   The defendant's Third and Fourth Special Defenses are consistent with this general rule.

On the issue of damages, the policy provided for replacement cost coverage, which allowed for the cost to replace materials with the same like, kind and quality as those in place at the time of the loss.   The parties were in dispute as to that value.   The plaintiff submitted evidence of costs in the amount of $729,349.50.   The defendant submitted evidence showing that value to be $435,843.91.   The difference was explained as being due to differing opinions as to the required scope, materials and methods that would be appropriate.   Neither side supplied any admissible expert testimony, or any other testimony in any detail, to justify their calculations.   The plaintiff's numbers appear to be extremely high for the project considering the size, extent of damage and quality of the house depicted in the photographs.   The defendant's work scope seems more appropriate and its cost estimate seems much more reasonable.   The plaintiff offered no persuasive justification for requiring more.   Accordingly, and after comparing the documents and considering all the available evidence, the court finds, consistent with the defendant's estimate, that the replacement cost is $435,843.91.   The policy also provided coverage for debris removal not to exceed 5 percent of the coverage limits, or $24,855.00 in this case.   See footnote 2, infra.   The evidence supports a full award;  therefore, the plaintiff is entitled to that full amount.   Therefore, the damage award subtotal amounts to $460,698.91

Certain adjustments are required.   The defendant is entitled to a credit for a $1,000.00 deductible, and for the $47,309.61 payment made to plaintiff's first mortgagee, Webster Bank. That reduces the subtotal to $412,389.30.

The plaintiff also claims consequential damages in the amount of $80,508.00, consisting of a judgment entered against her in a lawsuit brought the City of Hartford for violation of the city's anti-blight ordinance.   For allowing the property to remain in a state of damage, collapse and deterioration, a judgment entered against the plaintiff in the amount of $80,508.00 in that matter, and the city has filed a lien on the land records against the property to secure that debt.

“[D]amages resulting from a breach of contract may be divided into those which flow naturally and usually from the breach itself, or general damages, and those which do not naturally flow from such a breach, but did in this case, or special or consequential damages ․ Consequential damages ․ include those damages that, although not an invariable result of every breach of this sort, were reasonably foreseeable or contemplated by the parties at the time the contract was entered into as a probable result of the breach.   These ․ must be proximately caused by the breach, and [unlike general damages] ․ they do not always follow a breach of this particular character.”  Milford v. Coppola Construction, 93 Conn.App. 704, 715, 891 A.2d 31 (2006);  see also Cruz v. Visual Perception, LLC, 136 Conn.App. 330, 340 n.8, 46 A.3d 209, cert. granted in part, 306 Conn. 903, 52 A.3d 730 (2012).   Consequential damages are an extracontractual liability which may be pursued in appropriate breach of insurance contract cases.   See, Capstone Building Corp. v. American Motorists Ins. Co., 308 Conn 760, 801–02, 67 A.3d 961 (2013).

In the instant case, the court is not persuaded that the parties contemplated or reasonably foresaw, at the time they entered into the contract, that the homeowner would violate city blight ordinances in the event of fire damage.   The damage was caused by the fire.   The ordinance violation was caused by the plaintiff.   The defendant's decision to deny the claim was understandable, considering the statements of the plaintiff and her witnesses at the time.   The plaintiff's failure to pay to adequately preserve her property ¹ pending litigation was a result of her choice, or due to her own lack of fiscal resources.   The court notes that, in addition to not paying to adequately secure her home, the plaintiff also did not pay her taxes, and the city has commenced proceedings to conduct a tax sale of the property.   She does not identify that delinquency as a consequential damage.   Nevertheless, that circumstance illuminates the fact that the plaintiff, for whatever reason, has generally decided to devote no attention or resources to her home pending litigation.   That lack of attention or resource allocation was a substantial factor in causing the judgment for violation of the blight ordinance, and it persuades the court that the plaintiff has failed to prove that the defendant caused that injury.   There is not a sufficient nexus between the events.   See Kumah v. Brown, 130 Conn.App. 343, 352, 23 A.3d 758 (2011), aff'd 307 Conn. 620, 58 A.3d 247 (2013).   Therefore, the requested award for consequential damages is denied.

In sum, the plaintiff's damages total $412,389.30.²

V

For all of the foregoing reasons, the court renders judgment for the plaintiff, and against the defendant, on the remaining First Count of the plaintiff's Second Revised Complaint dated June 6, 2011 (Doc. No. 114.00) in the amount of $412,389.30

Robert F. Vacchelli

Judge, Superior Court

FOOTNOTES

FN1. The plaintiff did incur expenses of $2,833.25 for temporary repairs shortly after the fire.   She hired a company to board up the windows and doors, and to cover the rear corner of the building that was damaged in the fire..  FN1. The plaintiff did incur expenses of $2,833.25 for temporary repairs shortly after the fire.   She hired a company to board up the windows and doors, and to cover the rear corner of the building that was damaged in the fire.

FN2. The policy limited liability coverage at $398,200.00, plus a dwelling coverage endorsement for an additional $99,500.00 in coverage, plus an additional 5 percent of that total for debris removal, calculated to be $24,855.00, plus an inflation escalator which the parties failed to identify with reasonable certainty.   In any event, since the damages found do not exceed the known policy limits, it is not necessary to decide whether the damages to be awarded must be reduced to the policy coverage limit..  FN2. The policy limited liability coverage at $398,200.00, plus a dwelling coverage endorsement for an additional $99,500.00 in coverage, plus an additional 5 percent of that total for debris removal, calculated to be $24,855.00, plus an inflation escalator which the parties failed to identify with reasonable certainty.   In any event, since the damages found do not exceed the known policy limits, it is not necessary to decide whether the damages to be awarded must be reduced to the policy coverage limit.

Vacchelli, Robert F., J.