West v. Harris

Citation573 F.2d 873
Decision Date26 May 1978
Docket NumberNo. 76-2531,76-2531
PartiesCarl D. WEST, Plaintiff-Appellee-Cross-Appellant, v. Patricia Roberts HARRIS, Secretary of the United States Department of Housing and Urban Development, Defendant-Appellant-Cross-Appellee. Andrew J. DAIGLE, Plaintiff-Appellee-Cross-Appellant, v. Patricia Roberts HARRIS, Secretary of the United States Department of Housing and Urban Development, Defendant-Appellant-Cross-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Robert Kopp, Atty., Marta W. Berkley, Atty., Civil Div., Dept. of Justice, Washington, D. C., P. A. Bienvenu, P. Albert Bienvenu, Jr., Bienvenu, Foster, Ryan & O'Bannon, New Orleans, La., for defendant-appellant cross-appellee.

Leopold B. Babin, Houma, La., for plaintiff-appellee cross-appellant.

P. Albert Bienvenu, Jr., P. A. Bienvenu, Bienvenu, Foster, Ryan & O'Bannon, New Orleans, La., for National Flood Insurers Association (original defendant).

Appeals from the United States District Court for the Western District of Louisiana.

Before CLARK and GEE, Circuit Judges, and LYNNE *, District Judge.

CHARLES CLARK, Circuit Judge:

These cases both involve claims by insureds under policies of flood insurance issued pursuant to the National Flood Insurance Act of 1968, 42 U.S.C.A. § 4001 et seq. After a consolidated trial Andrew J. Daigle won a jury verdict against the National Flood Insurers Association in the amount of $12,084.56, and Carl D. West won a verdict in the amount of $17,500.00, the policy limit. Judgment was entered pursuant to the verdicts, but on post-trial motion the amount of each judgment was reduced by the $200 policy deductible. On appeal the National Flood Insurers Association 1 contends (1) that the trial judge should have granted defendant's motions for directed verdict and for judgment notwithstanding the verdict since the evidence was insufficient to show that the damage was a direct loss by flood; (2) that the trial judge should have granted defendant's motions for directed verdict and for judgment notwithstanding the verdict since the undisputed evidence established that the damage resulted from a peril which the policies excluded from coverage; (3) that the jury awarded damages for items not covered by the policies; and (4) that the trial judge committed reversible error in instructing the jury. On cross-appeal the plaintiffs raise additional issues involving the recoverability of a penalty and attorney's fees provided by Louisiana insurance law and the recoverability of prejudgment interest. We reverse both cases and remand the West case for new trial on the issue of damages only.

Since these decisions turn on the terms of identical policies of insurance issued to the plaintiffs by the defendant, we will set forth those terms with some particularity. Upon the payment of a premium by the plaintiffs, the defendant agreed to insure the plaintiffs' homes in the Morgan City, Louisiana, area "against all DIRECT LOSS BY 'FLOOD' as defined herein . . . ." The policy defined "flood" as follows:

Wherever in this policy the term "flood" occurs, it shall be held to mean a general and temporary condition of partial or complete inundation of normally dry land areas from (1) the overflow of inland or tidal waters, (2) the unusual and rapid accumulation or runoff of surface waters from any source, or (3) mudslides which are caused or precipitated by accumulations of water on or under the ground.

Immediately below this definition was a "Perils Excluded" provision:

Perils Excluded This Company shall not be liable for loss:

(a) by . . . (3) water, moisture or mudslide damage of any kind resulting primarily from conditions, causes or occurrences which are solely related to the described premises or are within the control of the Insured (including but not limited to design, structural or mechanical defects, failures, stoppages or breakages of water or sewer lines, drains, pumps, fixtures or equipment, seepage or backup of water, or hydrostatic pressure) or any condition which causes flooding which is substantially confined to the described premises or properties immediately adjacent thereto;

(d) by fire, windstorm, explosion, erosion, earthquake, landslide or any other earth movement except such mudslides as are covered under the peril of flood, or by theft;

The Daigle policy had a term of March 31, 1973, to March 31, 1974, and the West policy had a term of April 16, 1973, to April 16, 1974.

The Daigle Case

The plaintiff's evidence in the Daigle case showed that the Daigles had purchased their house new in 1966. The house had a slab foundation and was built on reclaimed swamp land. The soil prevalent throughout this area is a mixture of humus and clay which expands when wet and contracts when dry. These soil movements cause houses built on slabs to heave and settle slightly with soil moisture changes. Despite numerous wet and dry periods during the seven years before April 17-18, 1973, the Daigles noticed no structural damage to their house. During that time, however, they had found it necessary on occasion to purchase dirt fill for use in landscaping, gardening, and repairing "pot holes" which had developed in their yard.

On April 17-18, 1973, a twelve-to fourteen-inch rainfall inundated the Morgan City area. That rainfall caused flooding conditions in many sections of Morgan City, and the flood water was waist-deep in the street in front of the Daigles' house. The water reached a point approximately half the distance between the street and their house, the highest it had risen since they bought the house, but the flood waters never entered their house. Following this rainfall a severe drought occurred which lasted through August.

Mrs. Daigle testified that they noticed damage to their house almost immediately after the rainfall. They first heard cracking sounds, and then they observed small cracks in the walls that got bigger and bigger as time went by. Mr. Shumaker, a construction contractor who inspected the house in July 1973, confirmed that the cracking had occurred only a few months earlier, and Mr. Guillory, an architectural engineer, opined that "the flooding certainly had a direct effect on the matter."

This testimony was sufficient to support the jury's finding that the crack damage was a direct loss by flood. However, the plaintiff's proof also established how the flood caused this damage, and that proof brings into effect the policy's earth movement exclusion.

According to Mr. Guillory and Mr. Shumaker, the normal situation in Morgan City is for water to be kept in the drainage canals around Morgan City to maintain the water table for the sole purpose of stabilizing the soil. During the heavy rainfall of April 17-18, the soil became supersaturated with moisture, which caused the Daigles' house to heave, or rise, slightly. The municipal authorities became alarmed at the water accumulation in the canals, one of which was behind the Daigles' house, and they determined to drain the canals as rapidly as possible. The rapid draining of the canals lowered the water table quickly, with the result that the soil dried and the house settled unevenly, causing cracking in the slab, sheetrock, and masonry of the Diagle house.

Dr. Capozzoli, the soil expert who testified for the defendant, agreed that the drying of the soil caused the earth to sink and settle, and that in turn caused the damage to the Daigles' house. He differed from Mr. Guillory, however, about the effect the flood and its aftermath had on this process. Dr. Capozzoli was of the opinion that the settlement was in process before the flood due to the nature of the soil and that the flood played no more than a negligible role in causing the damage to the house. He did admit, however, that had a professional inspected the house immediately before the flood and found no cracks, and reinspected it immediately after the flood and found cracks, he would agree that the flood was a causative factor.

At the end of the plaintiff's evidence and again at the close of all the evidence, the defendant moved for a directed verdict both on the ground that the evidence failed to establish that the plaintiff's damage was a direct loss by flood and on the ground that the evidence established the applicability of several of the policy exclusions, including exclusion of all earth movement except mudslides. The trial judge, being of the opinion that the separate contentions as to coverage and exclusion were merely two sides of the same coin, denied the motion and submitted the case to the jury to determine whether the plaintiff suffered a direct loss by flood. The defendant renewed these contentions on motion for judgment notwithstanding the verdict, which the trial court denied. This action was error. The evidence entitled the defendant to judgment as a matter of law in the Daigle case.

The determination of the legal operation of the unambiguous language of a contract is a function for the court and not the jury. Nat Harrison Associates, Inc. v. Gulf States Utilities Co., 491 F.2d 578 (5th Cir. 1974); Gore v. American Motorists Insurance Co., 441 F.2d 10 (5th Cir. 1971); see Ammons v. Franklin Life Insurance Co., 348 F.2d 414 (5th Cir. 1965). In this case the undisputed facts show that the immediate cause of the Daigles' loss was earth movement which was not a mudslide, a peril excluded in unambiguous terms under clause (d) of the "Perils Excluded" section of the policy.

Regardless of the role the flood of April 17-18 played in bringing about the conditions that led to the damage of the Daigles' house, the testimony of Mr. Shumaker, Mr. Guillory, and Dr. Capozzoli established without contradiction that the immediate cause of the damage was the settlement of the house due to uneven soil support. The house sank because the earth below it shifted and settled as a result of loss of moisture in the soil. Regardless of whether this...

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