Adrian Associates, General Contractors v. National Sur. Corp.

Decision Date30 June 1982
Docket NumberNo. 21125,21125
Citation638 S.W.2d 138
PartiesADRIAN ASSOCIATES, GENERAL CONTRACTORS, Appellant, v. NATIONAL SURETY CORPORATION, Appellee.
CourtTexas Court of Appeals

W. Kyle Gooch, Canterbury & Elder, Dallas, for appellant.

Craig Eggleston, Thompson, Coe, Cousins & Irons, Dallas, for appellee.

Before ROBERTSON, CARVER and WHITHAM, JJ.

WHITHAM, Justice.

Appellant, Adrian Associates, General Contractors, appeals from a summary judgment in favor of Appellee, National Surety Corporation. Because we agree with the Contractor that the phrase "water below the surface of the ground" as used in the underground water exclusion in an all risks insurance policy does not include water from an artificial source, we reverse and remand.

Due to the rupture of an underground water main owned by a municipality, water escaped and migrated below the surface of the ground and underneath a concrete slab the Contractor had poured as the foundation for a warehouse under construction. The escaped water remained under the surface of the ground at all times. The presence of the escaped water caused a void between the slab and the soil upon which it had been placed. The slab subsided or settled to the extent that the Contractor was required to tear out and reconstruct portions of the slab.

The Insurance Company sought and obtained summary judgment based on three exclusions in the builder's all risk policy; however, on appeal the Insurance Company concedes that the present record is not sufficiently developed as to the "earth movement" exclusion and no longer urges that exclusion as a basis for upholding the summary judgment. Therefore, our disposition of this appeal turns on interpretation of the following two exclusions:

8. EXCLUSIONS

In addition to the exclusions in the policy to which this endorsement is attached, this policy does not insure against:

* * *

(c)(3) Water below the surface of the ground, including that which exerts pressure on or flows, seeps or leaks through sidewalks, driveways, foundations, walls, basement or other floors, or through doors, windows or any other openings in such sidewalks, driveways, foundations, walls or floors; unless loss by fire or explosion ensues, and then only for such ensuing loss. This exclusion shall not apply to property in due course of transit or to loss arising from theft;

(d) Loss, damage or expense caused by or resulting from subsidence, settling, cracking, shrinkage, bulging or expansion of pavements, foundations, walls, sidewalks, driveways, patios, floors, roofs or ceilings unless such loss results from a peril not excluded in this policy. If loss by a peril not excluded ensues, then this Company shall be liable only for such ensuing loss;

With respect to exclusion (c)(3), the Insurance Company contends that "water below the surface of the ground" is not limited to underground water of "natural origin" but includes all subsurface water, including that from an artificial source. Citing Park v. Hanover Insurance Co. 443 S.W.2d 940 (Tex. Civ. App.--Amarillo 1969, no writ) the Insurance Company argues that the law in Texas on this point is settled. In that case Park brought suit under an "all risks" policy for damage caused to the foundation of his home when an underground waterline leaked, causing the subsoil beneath the house to soften and the foundation to shift. The Amarillo Court of Civil Appeals rejected Park's argument that the underground water exclusion in the policy (identical to exclusion (c)(3) in the present case) extended only to subsurface water from a natural source and did not extend to water from an artificial source such as a water pipe leakage. That court stated:

This interpretation is not compatible with the clear language of the policy and the uncontradicted facts ....

It is uncontradicted that appellants' loss and admitted damage was caused by water below the surface of the ground. This was the direct cause and not a remote cause. The water flowed from the water line below the surface and remained below the surface.... The damage was clearly within exclusion d(3).

Although Park was not reviewed by the Supreme Court of Texas, the Supreme Court of Kansas cited it with approval in Krug v. Millers' Mutual Insurance Ass'n. of Illinois, 209 Kan. 111, 495 P.2d 949 (1972). Krug also involved a claim for damage to the foundation of a home caused by a subsurface water pipe leakage under an all risk insurance policy containing an exclusion identical to exclusion (c)(3) in the present case. As in Park, the Supreme Court of Kansas rejected appellant's claim and held the exclusion applicable to water below the surface of the ground from artificial, as well as natural, sources. Courts of other states, however, in considering an exclusion identical or similar to exclusion (c)(3) under similar facts have reached the opposite interpretation. Cf. Standard Electric Supply Co., Inc. v. Norfolk and Dedham Mutual Fire Insurance Co., 1 Mass.App. 762, 307 N.E.2d 11 (1973); Koncilja v. Trinity Universal Insurance Co., 35 Colo.App. 27, 528 P.2d 939 (1974); Broome v. AllState Insurance Co., 144 Ga.App. 318, 241 S.E.2d 34 (1977); New Hampshire Insurance Co. v. Robertson, 352 So.2d 1307 (Miss. 1977). In Koncilja v. Trinity Universal Insurance Co., supra, the Colorado Court of Appeals specifically rejected the approach taken in Park and Krug.

In the present case, the policy contains three water exclusions, one of which is exclusion (c)(3), as follows (c)(1) Flood, surface water, waves, tidal water, or tidal wave, overflow of streams or other bodies of water, or spray from any of the foregoing, all whether driven by wind or not;

(c)(2) water which backs up through sewers or basement drains;

(c)(3) water below the surface of the ground, including that which exerts pressure on or flows, seeps or leaks through...

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12 cases
  • Yancey v. Floyd West & Co., 2-87-263-CV
    • United States
    • Texas Court of Appeals
    • July 28, 1988
    ...policy, even more stringent construction than usual is required. Glover, 545 S.W.2d at 761; Adrian Associates v. National Surety Corp., 638 S.W.2d 138, 140 (Tex.App.--Dallas 1982, writ ref'd n.r.e.). These special rules favoring the insured are only applicable where there is an ambiguity in......
  • Adams-Arapahoe Joint School Dist. No. 28-J v. Continental Ins. Co.
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  • Grain Dealers Mut. Ins. Co. v. McKee
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    ...even more stringent construction than usual is required. Glover, 545 S.W.2d at 761; Adrian Assocs., Gen. Contractors v. National Surety Corp., 638 S.W.2d 138, 140 (Tex.App.--Dallas 1982, writ ref'd n.r.e.). This is true even if the construction urged by the insurer appears to be more reason......
  • Jones v. Columbia Mut. Ins. Co.
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    ...349 N.Y.S.2d 187 (1973), aff'd, 35 N.Y.2d 890, 364 N.Y.S.2d 890, 324 N.E.2d 360 (1974); and Adrian Associates, General Contractors v. National Surety Corp., 638 S.W.2d 138 (Tex.Civ.App.1982), aff'd, 650 S.W.2d 67 (Tex.1983). Cases denying recovery include Krug v. Millers' Mutual Insurance A......
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