Ms. Cole also alleged that the sellers had acted maliciously and in bad faith by attempting to conceal the property's condition. Further, she alleged that the "Residential Property Condition Disclosure Report" contained either intentional or negligent misrepresentations about the concrete's condition.

Ms. Cole sought damages for the repair and replacement of the concrete, the diminished value of the property, legal fees, costs, and expenses.

The sellers sought coverage and a defense from their homeowners' insurer, Allstate Insurance Company.

Allstate refused, and filed a complaint seeking a declaratory judgment that it had no obligation to defend or indemnify the sellers in the lawsuit brought by Ms. Cole.

Allstate moved for summary judgment.

The Allstate Policy

The Allstate policy provided:

Allstate will pay damages which an insured person becomes legally obligated to pay because of bodily injury or property damage arising from an occurrence to which this policy applies, and is covered by this part of the policy.

We may investigate or settle any claim or suit for covered damages against an insured person. If an insured person is sued for these damages, we will provide a defense with counsel of our choice, even if the allegations are groundless, false or fraudulent. We are not obligated to pay any claim or judgment after we have exhausted our limit of liability. 

The policy excluded coverage for:

[B]odily injury or property damage intended by, or which may reasonably be expected to result from the intentional or criminal acts or omissions of, an insured person. This exclusion applies even if:

a) such bodily injury or property damage is of a different kind or degree than that intended or reasonably expected; or

b) such bodily injury or property damage is sustained by a different person than intended or reasonably expected.

This exclusion applies regardless of whether or not the insured person is actually charged with, or convicted of, a crime.

The policy did not cover:

property damage to property rented to, occupied or used by, or in the care of, an insured person 

or:

any liability an insured person assumes arising out of any contract or agreement. 

The district court granted Allstate's motion.

In its decision, the district court explained that, under Connecticut law, damages flowing from misrepresentations were not property damage as that term normally was used in a homeowners' insurance policy.

The district court then pointed out that Ms. Cole's lawsuit hinged not on the allegedly deteriorating concrete itself but, rather, on the sellers' allegedly intentional or negligent misrepresentations about the condition of the concrete. Although Ms. Cole's purported injury related to the alleged property damage, the district court added, the cracking concrete predated the sellers' alleged concealment of it, and their alleged concealment was "not a covered event" under their homeowners' insurance policy.

Allstate, therefore, had no duty to defend the sellers, and no duty to indemnify them.

The case is Allstate Ins. Co. v. Swaminathan, No. 3:16-cv-1708 (VAB) (D. Conn. Dec. 27, 2017). Attorneys involved include: For Allstate Insurance Company, Plaintiff: Raymond T. Demeo, LEAD ATTORNEY, Robinson & Cole, Hartford, CT; Jessica A.R. Hamilton, Robinson & Cole, LLP-HTFD, Hartford, CT. For Sudha Swaminathan, Kanishka Tankala, Defendants: Robert F. Kappes, Silvester & Daly, New London, CT. For Kristen Cole, Defendant: Brian D. Danforth Tolisano & Danforth, LLC, Ellington, CT.