Albuquerque Gravel Prod. Co. v. American Emp. Ins. Co., 6299.

• Decision Date: 03 September 1960
• Docket Number: No. 6299.,6299.
• Citation: 282 F.2d 218
• Parties: ALBUQUERQUE GRAVEL PRODUCTS COMPANY, no stockholders' liability, a New Mexico corporation, Appellant, v. AMERICAN EMPLOYERS INSURANCE COMPANY, a corporation, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

282 F.2d 218 (1960)

ALBUQUERQUE GRAVEL PRODUCTS COMPANY, no stockholders' liability, a New Mexico corporation, Appellant, v. AMERICAN EMPLOYERS INSURANCE COMPANY, a corporation, Appellee.

No. 6299.

United States Court of Appeals Tenth Circuit.

September 3, 1960.

Robert W. Botts (of Botts, Botts & Mauney), Albuquerque, N. M. (Iden & Johnson, Albuquerque, N. M., on the brief) for appellant.

Charles B. Larrabee, Albuquerque, N. M. (Rodey, Dickason, Sloan, Akin & Robb, Albuquerque, N. M., on the brief), for appellee.

Before BRATTON, PICKETT and LEWIS, Circuit Judges.

PICKETT, Circuit Judge.

The American Employers Insurance Company issued to plaintiff, Albuquerque Gravel Products Company, an insurance policy in which it agreed:

"To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident."

Actions were brought against the insured in the New Mexico State courts by various persons, alleging that damages had resulted from insured's negligent construction of a loading ramp across the natural water course of Hahn arroyo in northeastern Albuquerque, New Mexico, which diverted the flow of water onto adjoining premises, causing the damages complained of. The insurance company refused the insured's request to defend the actions upon the ground that the allegations of the various complaints did not bring the actions within the coverage of the policy.¹ In the defense and settlement of the actions the insured expended the sum of $12,786.76 and brought this action to recover that amount from the insurance company. It is alleged that during the months of July, August and September, 1955, floods in the area of plaintiffs' property resulted from rains of a sudden, unpredicted and unprecedented character and therefore constituted an accident within the meaning of the policy. The insurer denied that the rainfall was sudden, unpredicted and unprecedented or that the acts and circumstances out of which the claims against the insured arose were accidents. In a trial without a jury, the court found that the damages were not caused by an accident within the meaning of the policy provisions, and denied recovery.

The insured operated a ready mixed concrete business and its plant was located in the northeastern section of the City of Albuquerque, New Mexico. Adjoining the plant was an arroyo,² the natural channel of which carried into the Rio Grande River the surface waters which accumulated in the mountainous regions east of Albuquerque. In 1952 the insured constructed a truck ramp to facilitate the loading of material from trucks directly into railroad cars. It was approximately 50 feet wide, 200 feet long, and its highest elevation was 15 feet. The railroad tracks to which the ramp approached extended in a north-south direction and crossed the course of the arroyo at a point where it had widened into a flood plain. During the summer of 1955 there was an unusual amount of rainfall in the area which caused extensive flow of water down the arroyo, and at times created flood conditions.³ On August 6th, by reason of heavy rains, the flow was described by some of the witnesses as "unprecedented" and there was extensive flooding in the vicinity of the railroad tracks and the ramp, causing damage to the property of the state court plaintiffs. The evidence is without conflict that the flood conditions which caused the damage claimed in the state court actions resulted from the heavy rains in the Hahn arroyo area.

The terms of the insured's policy fix the right of recovery. Imperial Fire Ins. Co. v. Coos County, 151 U.S. 452, 14 S.Ct. 379, 38 L.Ed. 231. It is a general rule that the duty of the insurer to defend an action against an insured is to be determined from the allegations of the complaint, Lee v. Aetna Casualty & Surety Co., 2 Cir., 178 F.2d 750; Annotation 51 A.L.R.2d 461, unless the insurer knows that the true, but unpleaded, factual basis for the claims brings them within the coverage of the policy.⁴

The term "accident" as used in insurance policies, is usually defined as "an undesigned, sudden, and unexpected event, usually of an afflictive or unfortunate character, and often accompanied by a manifestation of force * * *." Neale Construction Co. v. United States Fidelity & Guar. Co., 10 Cir., 199 F.2d 591, 593. In Midland Const. Co. v. United States Cas. Co., 10 Cir., 214 F.2d 665, 666, we said:

"The meaning of the word `accident\' cannot be defined with pinpoint accuracy or definiteness. We sometimes speak of an event which is the usual, natural, and expected result of an act as an accident. But in legal parlance an accident under the terms of an insurance policy, such as we have here, is variously defined as an unusual and unexpected event, happening without negligence; an undesigned, sudden and unexpected event; chance or contingency; happening by chance or unexpectedly; an event from an unknown cause or an unexpected event from a known cause. It may be that an unprecedented, torrential downpour of rain may under certain conditions be considered an accident, but afternoon showers — and this seems to have been an ordinary rain — are not unusual or unexpected. Common experience teaches that they happen frequently and are of common occurrence. A farmer may go forth in the morning, with not a cloud in the sky, to cut his alfalfa and yet have rain fall before evening. This is of such common occurrence that its happening cannot be said to be unexpected, unusual, or unanticipated, or beyond the ordinary experience of man."

See also Hutchinson Water Co. v. United States Fidelity & Guar. Co., 10 Cir., 250 F.2d 892; United States Fidelity & Guar. Co. v. Briscoe, 205 Okl. 618, 239 P.2d 754;...