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November 23, 1999


The opinion of the court was delivered by: Lowell A. Senior, District Judge.


Presently before the Court are the motions of defendants Aetna Casualty Company of Connecticut ("Aetna"), The Home Indemnity Company ("Home") and The American Insurance Company of Fireman's Fund ("Fireman's Fund") (collectively "defendants") for summary judgment (Document Nos. 33, 34, 35), the response of plaintiff Caln Village Associates, L.P. ("Caln Village") and reply of defendants thereto.*fn1 The defendants provided insurance for the Caln Village Shopping Center. Caln Village made a claim under the policies but was denied coverage. This litigation ensued. For the reasons stated below, summary judgement will be granted.


Cain Village Associates is the owner of the Caln Village Shopping Center. Caln Village Associates is owned, inter alia, by Hough-Loew Associates, Inc., George Goldstone and Jack Loew. Hough-Loew Associates, Inc. is also the general partner of Caln Village Associates. (Appendix in Support of Defendant, American Insurance company's Motion for Summary Judgement ("Fireman's Fund App."), Tab 3 at 12, & Tab 4 at 37). Herbert Yentis and Company ("HYC") is the managing agent of the Caln Village Shopping Center. Charles Ambrose has been the vice president of HYC since 1991 and was responsible for the day to day inspection of the Cain Village Shopping Center.

Construction of the Cain Village Shopping Center began in the latter half of 1990 and was substantially completed in September, 1991. Hough-Loew Construction, Inc., ("Hough-Loew") was the general contractor. Hough-Loew in turn is owned by Jack Loew. (Fireman's Fund App., Tab 4 at 37). HYC rented the stores and tenants moved into the stores in late September, 1991.

The shopping center has twenty-two inline stores which are divided into three sections and four individual stores. The center section contains stores D through K. Caln Village asserts that those eight stores (D-K) suffered damage for which it is entitled to insurance coverage. Specifically, Caln Village claims that the general contractor's use of un-cured slag during construction has resulted in ongoing and progressive damage to the stores. Because the slag was un-cured, Caln Village contends that it has swelled and as a result the concrete floors in each of the stores (D-K) has risen which in turn has caused damage to the floors, doorways, walls, ceilings and fixtures.

The record is replete with internal memos and letters to and from Cain Village representatives complaining about damage to the stores at the shopping center. The complaints range from small things that need fixing (weather stripping, toilet seats and sticking doors) to "water problems caused by driving rain entering the through doors to the rear of the stores and cracks in the walls and floors. Complaints about settlement cracks were a consistent theme, beginning in 1992." (See Fireman's Fund App., Tabs 13-32). The record indicates that on January 8, 1992, Ambrose reported to a Hough-Loew representative that there was a "severe settlement crack" in unit E. (Id. at Tab 13). The crack was approximately 20 feet long which had run completely through a four inch concrete slab. (Goldstone Dep. at 125). Settlement problems were again reported on August 7, 1992. (Fireman's Fund App. at Tab 17). A January 5, 1993, memo queries whether Hough-Loew has resolved the floor cracking problem yet. (Id. at Tab 19). On January 15, 1993, Ambrose called Hough-Loew about a crack in the wall through which the tenants "could see their neighbor." (Id. at Tab 20). On June 21, 1993. Ambrose wrote that stores D-K have a "fairly serious settlement problem in the front of each store." (Id. at Tab 24). On August 24, 1993, Ambrose asked for an update on the continuing settlement problems. (Appendix of Defendant, Aetna Casualty Company of Connecticut in Support of Its Motion for Summary Judgement ("Aetna App."), Tab 8, Exh. G).

On September 21, 1993, Mr. Goldstone, a part-owner of HYC, wrote to Hough-Loew with concerns about the continuing settlement problem. "We have a serious problem with the settlement condition, which is continuing along the fronts of the stores in the D through K units." (Id. at Tab 8, Exh. H (emphasis in original)). Goldstone explained that the setting caused the window sills to move down and, as a result, Caln Village expected to experience problems with glass breakage or leakage. He also linked the sticking of doors to the falling of the thresholds and settlement of door jams. Finally, he explains that the flash patching and new tiles which apparently had been provided by Hough-Loew only provided a temporary solution.*fn3 (Id.).

During the Spring of 1994, the "settling problem" began causing cracks to appear not just in the floors but also the walls. (Fireman's Fund App. at Tab 30). On June 9, 1994, Ambrose reported to Hough-Loew that the brick facade of one of the stores was separating from the walls around the window and door areas. (Id. at Tabs 32). Also, in one of the stores the sink was separating from the wall. (Id.).

By July 27, 1994, Hough-Loew had identified the cause of the "problem" at the Caln Village Shopping Center. An internal memo attributes the "problem" to expansive fill beneath the floor slabs. (Id. at Tab 33). According to the memo, the uncured slag was drawing in moisture and changing chemically which can cause uncured slag to expand up to 10% of its volume. (Id.). Although the memo stated that it is "impossible to determine" how long the expansion process takes, it also stated that it is possible to determine, by means of core drilling and x-ray diffraction analysis, if the chemical reaction is complete. (Id.).

On July 28, 1994, Mr. Thompson, President of Hough-Loew, wrote to Jack Loew, a principle in Caln Village, stating:

  I spoke with Dave Davis regarding the apparent
  expansive slag problem at Caln Village. He did not see
  the necessity of getting an expert in at this time. He
  did however feel that it was extremely important to
  put the various subcontractors and insurance company
  [sic] on notice of the problem.
    He also felt it was very important to level (no pun
  intended) with Yentis as to the problem and probable
  cause. To this end, I wrote you the attached memo with
  may be suitable to forward to them.

(Id. at Tab 34). Attached to the letter from Thompson was the July 27, 1994, memo in which Hough-Loew states that the damage at Caln Village is consistent with expansive fill beneath the floor slab, resulting in cracked and raised door thresholds, drywall ...

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