18‐1269‐cv
Mazzarella v. Amica Mut. Ins. Co.


                                  UNITED STATES COURT OF APPEALS
                                      FOR THE SECOND CIRCUIT

                                                  SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.


              At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in
the City of New York, on the 16th day of May, two thousand nineteen.

PRESENT:            AMALYA L. KEARSE,
                    RICHARD C. WESLEY,
                    DENNY CHIN,
                              Circuit Judges.

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JOSEPH R. MAZZARELLA, WENDY M.
MAZZARELLA,
                    Plaintiffs‐Appellants,

                                        v.                                             18‐1269‐cv

AMICA MUTUAL INSURANCE COMPANY,
                  Defendant‐Appellee.

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FOR PLAINTIFFS‐APPELLANTS:                                   THOMAS J. FINN (Paula Cruz Cedillo,
                                                             Nicholas M. Insua, and David C. Kane, on the
                                                             brief), McCarter & English, LLP, Hartford,
                                                             Connecticut and Newark, New Jersey.
FOR DEFENDANT‐APPELLEE:                  CHRISTOPHER M. REILLY (Anthony J.
                                         Antonellis, John McCormack, and Michael S.
                                         Antonellis, on the brief), Sloane & Walsh, LLP,
                                         Boston, Massachusetts.

              Appeal from the United States District Court for the District of

Connecticut (Underhill, J.).

              UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.

              Plaintiffs‐appellants Joseph R. Mazzarella and Wendy M. Mazzarella

appeal from a judgment, entered March 30, 2018, dismissing their claims against

defendant‐appellee Amica Mutual Insurance Company (ʺAmicaʺ). By decision entered

February 8, 2018, the district court granted Amicaʹs motion to dismiss the second

amended complaint (the ʺComplaintʺ) pursuant to Federal Rule of Civil Procedure

12(b)(6). We assume the partiesʹ familiarity with the underlying facts, procedural

history, and issues on appeal.

              In this insurance coverage dispute, the Mazzarellas allege that Amica

wrongfully denied their claim for ʺdirect physical lossʺ to their home ʺcaused by water

and oxygen infiltration, including damage to concrete basement walls, interior walls,

floor tiles, subfloors and wood floors, interior doors and windows, and the chimney, as

well as damage from rainwater entering the Residence.ʺ J. Appʹx at 146. The insurance

policy (the ʺPolicyʺ) excluded loss caused by ʺwater,ʺ in many forms as discussed

further below. Id. at 216, 218. The water exclusion applied to loss caused ʺdirectly or


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indirectlyʺ and such loss was ʺexcluded regardless of any other cause or event

contributing concurrently or in any sequence to the loss.ʺ Id. at 218. In addition, the

Policy did not insure for loss caused by ʺ[w]ear and tear, marring, [or] deterioration,ʺ id.

at 216; ʺ[m]echanical breakdown, latent defect, inherent vice or any quality in property

that causes it to damage or destroy itself,ʺ id.; or ʺ[s]ettling, shrinking, bulging or

expansion, including resultant cracking, of bulkheads, pavements, patios, footings,

foundations, walls, floors, roofs, or ceilings,ʺ id.

              The Complaint asserted claims against Amica for (1) breach of contract; (2)

breach of the implied covenant of good faith and fair dealing; and (3) violation of the

Connecticut Unfair Trade Practices Act (ʺCUTPAʺ), Conn. Gen. Stat. § 42‐100a et seq.,

and Connecticut Unfair Insurance Practices Act (ʺCUIPAʺ), Conn. Gen. Stat. § 38a‐816.

In its February 8th decision, the district court dismissed with prejudice claims for

damage to the ʺconcrete basement wallsʺ and without prejudice claims ʺnot connected

to the deterioration of the basement walls.ʺ Special Appʹx at 16. Instead of repleading

and filing a third amended complaint, however, the Mazzarellas filed this appeal. They

argue that the district court erred in dismissing the Complaint because they sufficiently

alleged that Amica breached the contract by denying coverage for a loss covered by the

Policy, acted in bad faith, and violated CUTPA and CUIPA. Pls. Appellantsʹ Br. at 1, 6‐

8.




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 I.   Standard of Review

              We review a district courtʹs decision to dismiss a complaint under Federal

Rule of Procedure 12(b)(6) de novo, accepting all factual allegations as true and drawing

all reasonable inferences in plaintiffʹs favor. Metz v. U.S. Life Ins. Co., 662 F.3d 600, 602

(2d Cir. 2011) (per curiam). ʺTo survive a motion to dismiss, a complaint must plead

enough facts to state a claim to relief that is plausible on its face.ʺ ECA & Local 134

IBEW Joint Pension Tr. of Chi. v. JP Morgan Chase Co., 553 F.3d 187, 196 (2d Cir. 2009)

(internal quotation marks omitted).

II.   Breach of Contract

              The district court did not err in holding that the Mazzarellas failed to state

a breach of contract claim because the claimed loss ‐‐ as described in the Complaint ‐‐

fell within the Policy exclusions as a matter of law.

              ʺ[T]he insured bears the burden of demonstrating that the loss suffered

falls within the terms of the policy, and as such the existence of coverage is an essential

element of plaintiffʹs claim.ʺ Uberti v. Lincoln Natʹl Life Ins. Co., 144 F. Supp. 2d 90, 102

n.5 (D. Conn. 2001) (citing Downs v. Natʹl Cas. Co., 152 A.2d 316, 319 (Conn. 1959)).

ʺWhen an insurer relies on an exclusionary clause to deny coverage, the initial burden is

on the insurer to demonstrate that all the allegations within the complaint fall

completely within the exclusion.ʺ State Farm Fire & Cas. Co. v. Tully, 142 A.3d 1079, 1085

(Conn. 2016). The interpretation of an insurance policy is governed by contract law,



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and ʺ[i]f the policyʹs terms are clear and unambiguous, then that language must be

accorded its natural and ordinary meaning.ʺ Valls v. Allstate Ins. Co., 919 F.3d 739, 744

(2d Cir. 2019) (per curiam) (quoting Lexington Ins. Co. v. Lexington Healthcare Grp., Inc.,

84 A.3d 1167 (Conn. 2014)).

              We need not decide whether the Mazzarellas sufficiently alleged a ʺdirect

physical lossʺ because, on the face of the Complaint, the claimed loss would fall within

the Policyʹs exclusions as a matter of law. J. Appʹx at 215, 218. The Complaint alleged

damage ʺcaused by water and oxygen infiltrationʺ and ʺrainwater entering the

Residence.ʺ J. Appʹx at 146. This asserted loss unambiguously falls within the exclusion

for loss caused by ʺ[w]ater,ʺ which includes ʺsurface water,ʺ ʺoverflow of any body of

water,ʺ ʺstorm surge,ʺ water that ʺ[b]acks up through sewers or drains,ʺ and water

ʺbelow the surface of the ground, including water which exerts pressure on, or seeps,

leaks, or flows through a building, sidewalk, driveway, patio, foundation, swimming

pool, or other structure.ʺ Id. at 218. Moreover, to the extent the Complaint alleges loss

from ʺwater and oxygen infiltrationʺ and damage to walls and floors, the loss would

surely fall within the Policyʹs other exclusions for damage caused by wear and tear,

deterioration, latent defects, settling, bulging, or expansion. Thus, based on the

allegations of the Complaint, the Mazzarellasʹ breach of contract claim fails as a matter

of law.




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III. Breach of Covenant of Good Faith and Fair Dealing

           The district court properly dismissed the Mazzarellasʹ claim that Amica

breached its implied duty of good faith and fair dealing. ʺTo constitute a breach of [the

implied covenant of good faith and fair dealing], the acts by which a defendant

allegedly impedes the plaintiffʹs right to receive benefits that he or she reasonably

expected to receive under the contract must have been taken in bad faith.ʺ De La Concha

of Hartford, Inc. v. Aetna Life Ins. Co., 849 A.2d 382, 388 (Conn. 2004). ʺAllegations of a

mere coverage dispute or negligence by an insurer in conducting an investigation will

not state a claim for bad faith against an insurer,ʺ Martin v. Am. Equity Ins. Co., 185 F.

Supp. 2d 162, 165 (D. Conn. 2002), and an insured cannot state a claim for bad faith

against the insurer if the insurer properly denied coverage under the insurance policy,

see Courteau v. Teachers Ins. Co., 243 F. Supp. 3d 215, 219 (D. Conn. 2017) (ʺIn the context

of an insurance policy, violations of express duties are necessary to maintain a bad faith

cause of action.ʺ (internal quotation marks omitted)); see also Capstone Bldg. Corp. v. Am.

Motorists Ins. Co., 67 A.3d 961, 988 (Conn. 2013) (ʺ[B]ad faith is not actionable apart from

a wrongful denial of a benefit under the policy.ʺ).

           The Mazzarellas allege that Amica breached the implied covenant of good

faith and fair dealing by ʺhandling the Mazzarellasʹ property damage claim in bad

faithʺ; failing to timely set forth a reasonable basis to justify Amicaʹs denial of coverage,

including its failure to investigate their residencesʹ ʺchimney, siding and framingʺ; and



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wrongfully applying the collapse provisions of the Policy to the Mazzarellasʹ claims. J.

Appʹx at 147‐49. These allegations are insufficient to state a claim of bad faith against

Amica as they plainly set forth a ʺmere coverage disputeʺ or a negligent investigation

claim. See Martin, 185 F. Supp. 2d at 165. Significantly, none of the factual allegations

suggest that Amica acted with a dishonest purpose. See De La Concha, 849 A.2d at 388

(ʺBad faith means more than mere negligence; it involves a dishonest purpose.ʺ

(internal quotation marks omitted)). Moreover, as we have held above, Amicaʹs denial

of coverage was not wrongful, and, accordingly, the bad faith claim is not

independently actionable. In these circumstances, the Mazzarellasʹ second cause of

action was properly dismissed.

IV. Violations of CUTPA and CUIPA

              The Mazzarellas assert that Amica engaged in unfair settlement practices

by denying them coverage under the Policy for direct physical damage caused by water

and oxygen infiltration, citing to other suits challenging Amicaʹs denial of pyrrhotite

damage as proof of Amicaʹs general business practice. The Mazzarellas further contend

that Amica engaged in unfair settlement practices by, inter alia, ʺmisrepresenting the full

nature of the property damageʺ to their home, ʺfailing to act with reasonable

promptness in response to the Mazzarellasʹ communications,ʺ and ʺfailing to

investigateʺ damage to the Mazzarellasʹ chimney, siding, and framing. J. Appʹx at 150.

An insured may assert CUIPA claims alleging that the insurer engaged in ʺunfair or



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deceptive act[s] or practice[s] in the business of insurance,ʺ Conn. Gen. Stat. § 38a‐815,

through CUTPA, which ʺprohibits any person from ʹengag[ing] in unfair methods of

competition and unfair or deceptive acts or practices in the conduct of any trade or

commerce.ʹʺ Hartford Roman Catholic Diocesan Corp. v. Interstate Fire & Cas. Co., 905 F.3d

84, 95 (2d Cir. 2018) (quoting Conn. Gen. Stat. § 42‐110b(a)). ʺTo prove an unfair claim

settlement practice, a plaintiff must demonstrate that the defendant has engaged in

unfair or deceptive acts with such frequency as to indicate a general business practice.ʺ

Id. (internal quotation marks omitted). Failure to state a breach of contract claim,

however, defeats a claim under CUTPA and CUIPA predicated upon a denial of

coverage. See Zulick v. Patrons Mut. Ins. Co., 949 A.2d 1084, 1091‐92 (Conn. 2008)

(holding that where insurerʹs interpretation of policyʹs coverage limitation is correct,

claims under CUTPA and CUIPA fail because ʺthere [could] be no genuine issue of

material fact as to whether the application of that interpretation as a general business

practice constituted oppressive, unethical or unscrupulous conduct in violation of the

statutesʺ); see also Liston‐Smith v. CSAA Fire & Cas. Ins. Co., 287 F. Supp. 3d 153, 163 (D.

Conn. 2017) (ʺBecause the court concludes that CSAAʹs denial of coverage was proper,

plaintiffsʹ claim that CSAAʹs alleged breach of contract was part of a general unfair

business practice fails as a matter of law.ʺ).

              Here, we conclude that Amica properly denied the Mazzarellasʹ claim

because the claimed loss fell within the Policyʹs exclusions. And to the extent that the



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Mazzarellas assert CUTPA and CUIPA claims premised on conduct apart from Amicaʹs

coverage denial ‐‐ e.g., failure to investigate the damage fully and failure to respond to

the Mazzarellas promptly ‐‐ the Mazzarellas support these claims only with citations to

cases involving improper denials of coverage. See J. Appʹx at 151‐52 (alleging that

Amica is involved in other litigations regarding its ʺalleged failure to provide coverage,ʺ

ʺrefusal to cover [] claims,ʺ and ʺdeni[al of] coverageʺ). Accordingly, the Mazzarellas

have not adequately pleaded that Amica engaged in CUTPA/CUIPA‐targeted

misconduct ‐‐ i.e., conduct distinct from the coverage denial ‐‐ with ʺsuch frequency as

to indicate a general business practice,ʺ Hartford Roman Catholic Diocesan, 905 F.3d at 95

(internal quotation marks omitted). Therefore, the district court properly dismissed the

Mazzarellasʹ claims under CUTPA and CUIPA.

                                           *   *   *

              We have considered the Mazzarellasʹ remaining arguments and conclude

they are without merit. Accordingly, the judgment of the district court is AFFIRMED.

                                          FOR THE COURT:
                                          Catherine OʹHagan Wolfe, Clerk




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