Amherst Ctry. Club v. Harleysville Worcester Ins., Civil No. 07-cv-136-JL.

• Decision Date: 24 June 2008
• Docket Number: Civil No. 07-cv-136-JL.
• Parties: AMHERST COUNTRY CLUB, INC. v. HARLEYSVILLE WORCESTER INSURANCE CO.
• Court: U.S. District Court — District of New Hampshire

561 F.Supp.2d 138

2008 DNH 120

AMHERST COUNTRY CLUB, INC. v. HARLEYSVILLE WORCESTER INSURANCE CO.

Civil No. 07-cv-136-JL.

United States District Court, D. New Hampshire.

June 24, 2008.

COPYRIGHT MATERIAL OMITTED

Timothy G. Kerrigan, Andrew J. Piela, Hamblett & Kerrigan PA, Nashua, NH, for Plaintiff.

Lawrence A. Dugan, Morrison Mahoney LLP, Boston, MA, Ralph Suozzo, Morrison Mahoney LLP, Manchester, NH, for Defendant.

ORDER

JOSEPH N. LAPLANTE, District Judge.

After the swimming pool on its premises was destroyed in the Mother's Day Flood of 2006, Amherst Country Club, Inc. petitioned the New Hampshire Superior Court for declaratory judgment that the Club's insurer, Harleysville Worcester Insurance Company, is obligated to cover the loss. See N.H.Rev.Stat. Ann. 491:22 (2001). Harleysville removed the action to this court pursuant to 28 U.S.C. §§ 1441 and 1446 (2006).

This court has subject matter jurisdiction under 28 U.S.C. § 1332 (diversity of citizenship).

The parties have filed cross-motions for summary judgment under Federal Rule of Civil Procedure 56. Each party argues that there are no genuine issues as to any material facts, but advocates for entirely different legal conclusions. Amherst Country Club argues that it is entitled to coverage as a matter of law, while Harleysville argues, also as a matter of law, that the insurance policy in question excludes coverage for the loss.

After hearing oral argument on the cross-motions, and after reviewing the parties' respective memoranda, objections, affidavits, reply briefs, expert reports and depositions, the court denies the Club's motion for summary judgment, grants Harleysville's motion for summary judgment, and awards judgment to Harleysville.

I. APPLICABLE LEGAL STANDARD

Under Federal Rule of Civil Procedure 56, a motion for summary judgment will be granted "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c) (2008) (amended December 1, 2007); see Celotex Corp. v Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (decided under prior, substantially identical version of the rule); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (same). "The object of summary judgment is to pierce the boilerplate of the pleadings and assay the parties' proof in order to determine whether trial is actually required." Dávila v. Corporatión de P.R. para la Difusión Público, 498 F.3d 9, 12 (1st Cir.2007) (quotations omitted) (quoting Acosta v. Ames Dep't Stores, Inc., 386 F.3d 5, 7 (1st Cir. 2004)).

Both parties have moved for summary judgment. "Cross motions simply require [the court] to determine whether either of the parties deserves judgment as a matter of law on facts that are not disputed." Littlefield v. Acadia Ins. Co., 392 F.3d 1, 6 (1st Cir.2004). New Hampshire law, however, which the parties agree is controlling,¹ places the burden of proof on the insurer. "By statute, the burden is on the insurance carrier to prove a lack of coverage." Hudson v. Farm Family Mut. Ins. Co., 142 N.H. 144, 146, 697 A.2d 501 (1997) (citing N.H.Rev.Stat. Ann. 491:22-a);² Union Mut., 835 F.Supp. at 63 ("[W]hen insurance coverage is disputed, New Hampshire law places the burden of proving that no coverage exists on the insurer.") (citing Laconia Rod & Gun Club v. Hartford Acc. & Indem. Co., 123 N.H. 179, 182, 459 A.2d 249 (1983)).

"The interpretation of the language of an insurance policy, like any contract language, is ultimately an issue for the court to decide." Merchants Mut. Ins. Co. v. Laighton Homes, LLC, 153 N.H. 485, 487, 899 A.2d 271 (2006) (citing D'Amour v. Arnica Mut. Ins. Co., 153 N.H. 170, 171, 891 A.2d 534 (2005)); Ekco Group, Inc. v. Travelers Indem. Co. of III., 273 F.3d 409, 412 (1st Cir.2001).

II. BACKGROUND

During mid-May, 2006, much of southern New Hampshire experienced prolonged, heavy rains, which became known as the "Mother's Day Flood." The parties and their respective experts agree that the rain and flooding caused increased groundwater levels, and that the water table in the pool area of the Amherst Country Club was unusually high. See infra Part III(B)(1) and n. 9.

On May 18 or May 19, 2006, a maintenance worker at the Amherst Swim Club, Inc. (the entity which operated the swimming pool located on the premises of the Amherst Country Club) drained the water from the pool for its spring cleaning, as had been done annually for approximately 30 years. The soil surrounding the concrete swimming pool was saturated with groundwater, creating hydrostatic pressure that, once enough water had been drained from the pool, "floated" the pool up and out of the ground. This disturbance of the pool's physical position caused its structure to crack and break, destroying it.

The Club, which had purchased its building and personal property insurance coverage from Harleysville, notified its insurance agent of the loss and requested coverage. The coverage provision of the policy's "Building and Personal Property Coverage Form" states:

A. Coverage

We will pay for direct physical loss or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.

1. Covered Property

a. Building, meaning the building or structure described in the Declarations, including:

....

(2) Fixtures, including outdoor fixtures.

The policy also includes a list of exclusions, or losses not covered by the policy: The pertinent "exclusions" provide:

B. EXCLUSIONS

1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.

....

b. Earth Movement

(4) Earth sinking (other than sinkhole collapse), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface.

....

g. Water

(4) Water under the ground surface pressing on, or flowing or seeping through:

(a) Foundations, walls, floors or paved surfaces;

(b) Basements, whether paved or not; or

(c) Doors, windows or other openings.

Section B(1) of the' exclusion provision set forth above is referred to by the parties as the "lead-in" provision, and is known in the industry as an "anti-concurrent causation" clause. The parties refer to sections B(1)(b) and B(1)(g) as the "earth movement exclusion" and the "water exclusion," respectively. Harleysville declined coverage based on the "water" exclusion. This declaratory judgment action followed.

III. ANALYSIS

The parties agree that, although the "coverage" section of the insurance policy makes no specific reference to swimming pools, it applies to the pool in question as a "fixture" or "outdoor fixture." See supra Part II; Pleasant Valley Campground, Inc. v. Rood 120 N.H. 86, 88, 411 A.2d 1104 (1980).

Amherst Country Club argues that (1) neither the "earth movement" nor "water" exclusion applies because they are too ambiguous, (2) in any event, the cause of the damage to the pool was not groundwater pressure, but the draining of the pool by a pool attendant,³ and (3) the lead-in anti-concurrent clause doctrine, if applicable, is unenforceable as a matter of public policy. Harleysville differs on all three points, arguing that (1) the plain and unambiguous language of the "earth movement" and "groundwater" exclusions releases it from the obligation to cover the losses, (2) the cause of the loss was the sub-surface groundwater pressure around and under the pool, as opposed to its draining, and (3) regardless of whether the groundwater pressure was the dominant cause or a concurrent cause, the "anti-concurrent causation" lead in clause excludes coverage, and is enforceable under New Hampshire law.

A. The terms of policy

1. Applicable law

The New Hampshire Supreme Court, and thus this court, "interprets an insurance policy in the same manner as any other contract." Hudson, 142 N.H. at 146, 697 A.2d 501 (citing Trombly v. Blue Cross/Blue Shield, 120 N.H. 764, 770, 423 A.2d 980 (1980)). "The fundamental goal of interpreting an insurance policy, as in all contracts, is to carry out the intent of the contracting parties. To discern the parties' intent, we first examine the language of the contract itself." Bates v. Phenix Fire Ins. Co., 156 N.H. 719, 943 A.2d 750 (2008) (quoting Tech-Built 153 v. Va. Surety Co., 153 N.H. 371, 373, 898 A.2d 1007 (2006)). New Hampshire courts will "enforce a policy provision that limits the insurance company's liability when the policy language is clear and unambiguous." Merchants Mut., 153 N.H. at 487, 899 A.2d 271 (citing Deyette v. Liberty Mut. Ins. Co., 142 N.H. 560, 561, 703 A.2d 661 (1997)). As discussed more fully infra, however, ambiguities in the policy's statement of coverage are construed in favor of the insured. See, e.g., Hoepp v. State Farm Ins. Co., 142 N.H. 189, 190, 697 A.2d 943 (1997).

The parties' dispute revolves in part around the meaning of three words in the "water" exclusion — "walls," "floors," and "paved surfaces," that are not defined in the policy.

If a term is not defined in the policy, the term is to be given its plain and ordinary meaning, construed "as would a reasonable person in the position of the insured based on more than a casual reading of the policy as a whole."

SIG Arms, Inc. v. Employers Ins. of Wausau, 122 F.Supp.2d 255, 259 (D.N.H.2000) (DiClerico, J.) (quoting High Country Assocs. v. N.H. Ins. Co., 139 N.H. 39, 41, 648 A.2d 474 (1994)). This familiar standard — requiring construction of the policy "as would a reasonable person in...