Bliss Mine Rd. Condo. Ass'n v. Nationwide Prop. and Cas. Ins. Co.

• Decision Date: 01 November 2010
• Docket Number: No. 2009-33-Appeal.,2009-33-Appeal.
• Citation: 11 A.3d 1078
• Parties: BLISS MINE ROAD CONDOMINIUM ASSOCIATION v. NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY.
• Court: Rhode Island Supreme Court

11 A.3d 1078

BLISS MINE ROAD CONDOMINIUM ASSOCIATION

v.NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY.

No. 2009-33-Appeal.

Supreme Court of Rhode Island.

Nov. 1, 2010.

David P. Whitman, Esq., Providence, for Plaintiff.

John M. Boland, Esquire, Providence, for Defendant.

Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ.

OPINION

Justice FLAHERTY, for the Court.

On December 9, 2005, Mother Nature paid a visit to coastal Rhode Island, wreaking havoc with a storm that featured wind gusts of up to seventy-five miles per hour accompanied by copious amounts of rain, snow, and sleet. Among the many properties damaged by the storm was a condominium owned by Susan and Robert Phinney. That property was insured under an insurance policy issued to the plaintiff, Bliss Mine Road Condominium Association, by the defendant, Nationwide Property and Casualty Insurance Co. Although there was a protracted period of negotiations, the parties were unable to successfully settle the matter because Nationwide insisted that the policy's windstorm deductible was applicable and that the amount of the deductible exceeded the loss.

The plaintiff filed suit; in a multicount complaint it alleged that Nationwide had breached the insurance contract, had waived certain rights under the contract,should be estopped from raising certain policy defenses, and was guilty of bad faith.¹

The case proceeded to trial before a jury. At the conclusion of the evidence, and before the case was submitted to the jury, plaintiff moved for judgment as a matter of law under Rule 50 of the Superior Court Rules of Civil Procedure. The trial justice reserved ruling on the motion and submitted the case to the jury, which returned a verdict for plaintiff. After the verdict, the trial justice granted plaintiff's motion for judgment as a matter of law.

On appeal, defendant Nationwide argues: (1) that the Superior Court's grant of a judgment as a matter of law in favor of plaintiff was improper; (2) that the instruction to the jury of the definition of windstorm was error because the policy contemplated a windstorm accompanied by other weather events; (3) that the jury instruction was misleading to the resultant prejudice of Nationwide; and (4) that the denial of the motion for a new trial was in error.

We affirm the judgment of the Superior Court.

Facts and Travel

This story actually began in October, 2005, when a rain storm caused significant roof damage to the Phinneys' condominium unit. In repairing the roof, the workers discovered the presence of asbestos, prolonging the completion of the job. When the December storm struck, the work remained unfinished and the roof of the Phinneys' unit was covered by a tarp, which was not strong enough to resist the effects of the severe weather.

The Phinneys went to their property on the morning of December 10 to determine whether it had incurred any damage. At trial, Susan Phinney described the first floor as "fine." However, she said that as she and her husband continued up the stairs, they noticed that the stairwell windows had water coming down the inside, that water was pooling on the windowsills, and that there was evidence of water coming down the walls. When they reached the second floor, they saw water on the walls and on the ceiling. Water also had pooled on the furniture and other horizontal surfaces. In the common-area hallway, the ceiling was damaged and water was running into the electrical box.

The Phinneys notified Nationwide, and on December 10 or 12, 2005, commercial claims associate Charles O'Neil received notice of the claim arising from the December 9 storm. Mr. O'Neil visited the property and spoke with property manager Donna Gaess about the storm and the damages resulting therefrom. Because the claim stemming from the damages to the Phinneys' unit as a result of the October storm had not yet been resolved, Mr. O'Neil amended the estimate from the October loss to reflect the damages from the December loss.

O'Neil reported that the company estimated that the Phinneys' unit had sustained damages in the amount of $16,691.59. Not satisfied with Nationwide's initial estimate, the Phinneys countered with two estimates of their own. Although they negotiated for a period, the parties were unable to agree upon a value for the loss and the cost of the necessary repairs. Mr. O'Neil prepared a second estimate that placed the assessment of the loss at $18,734.61. He applied a $2,000 deductible to that assessment, reflecting a $1,000 deductible for each of the stormscausing damage (October and December). ² Mr. O'Neil forwarded the revised estimate and a corresponding check to Ms. Gaess. The estimate and check were received by the Phinneys, who chose not to accept Nationwide's offer. They returned the check to Nationwide around March 22 or 23, 2006, and commenced an appraisal process that was set forth in the insurance contract.

As the result of the appraisal process, a determination of award was made in June 2006 that placed the value of the loss at $26,977.77. However, on June 29, Mr. O'Neil notified plaintiff Condominium Association that the amount of the award was less than the windstorm deductible set forth in the policy; and, therefore, Nationwide would not provide compensation.³

The Windstorm Deductible

The declarations page of the Nationwide insurance policy covering the Phinneys' property specifies that there is a $1,000 deductible for claims. However, contained within the policy language is a different deductible if damages are caused by "windstorm." That language is as follows:

"The Windstorm or Hail Deductible, as shown in the Schedule, applies to loss or damage to Covered Property caused directly or indirectly by Windstorm or Hail, regardless of any other cause or event that contributes concurrently or in any sequence to the loss or damage. If loss or damage from a covered weather condition other than Windstorm or Hail occurs, and that loss or damage would not have occurred but for the Windstorm or Hail, such loss or damage shall be considered to be caused by Windstorm or Hail and therefore part of the Windstorm or Hail occurrence.

"With respect to Covered Property at a location identified in the Schedule, no other deductible applies to Windstorm or Hail.

"The Windstorm or Hail Deductible applies whenever there is an occurrence of Windstorm or Hail.

"WINDSTORM OR HAIL DEDUCTIBLE CLAUSE

A. ALL POLICIES

"In determining the amount, if any, that we will pay for loss or damage, we will deduct an amount equal to 1%, 2% or 5% (as show in the Schedule) of the Limit(s) of Insurance applicable to the property that has sustained loss or damage."

The schedule accompanying the windstorm deductible shows a deductible percentage of 1 percent. The parties agree that 1 percent of the amount of coverage on the building at Bliss Mine Road ($3,240,000) is approximately $32,400. Because that figure exceeds the $26,977.77 appraisal for the damage resulting from the December storm, Nationwide was unwilling to make further payment on the claim.

At trial, Susan Phinney and property manager Donna Gaess testified for plaintiff; claims representative Charles O'Neil and meteorologist Steven Cascione testified for the defense.

Mr. O'Neil testified that Ms. Gaess informed him of the "significant storm * * * which resulted in the tearing up of the work that was going on on the roof and resulted in interior water damage." Mr. O'Neil testified that it was his agreement with property manager Donna Gaess thatthe loss was attributed to a windstorm. He conceded, however, that the parties did not discuss this term in the context of the specific policy language.

Meteorologist Steven Cascione testified for Nationwide that a storm developed as snow between 4 and 5 a.m. on December 9. That snow changed to sleet and freezing rain; and around 11 a.m., a heavy band of rain moved in from Connecticut with an arctic front and an area of low pressure developing off the New Jersey coast. The storm later began to produce very heavy snow and sleet as it continued to travel northward into Rhode Island. Heavy snow gradually moved into Narragansett Bay later in the afternoon. At 1:15 p.m., the storm system intensified and heavy rain changed to heavy snow, accumulating at a rate of two to three inches per hour. The witness testified that blizzard conditions developed across the state. At the time the storm intensified, the winds increased from twenty miles per hour to between thirty-five and forty-three miles per hour. The National Weather Service registered winds as high as forty-seven miles per hour between noon and 5 p.m. Mr. Cascione further testified that the winds reached the coast with gusts between seventy and seventy-five miles per hour, and as high as one hundred miles per hour from Cape Cod to Block Island.

At the close of the evidence, plaintiff moved for judgment as a matter of law as to count 1 of the complaint, breach of contract, based upon Rule 50 of the Superior Court Rules of Civil Procedure.⁴ Rule 50 provides in pertinent part:

"(a) * * *

"(1) If during a trial by jury a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue, the court may determine the issue against that party and may grant a motion for judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue.

" * * *

"(b) * * * Whenever a motion for a judgment as a matter of law made at the close of all the evidence is denied or for any reason is not granted, the court is deemed to have submitted the action to the jury subject to a later determination of the legal questions raised by the motion. Such a motion may be renewed by service and filing not later than 10 days after entry of judgment. * * * If a verdict was returned, the court may, in disposing of the

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