Bao v. Liberty Mut. Fire Ins. Co.

• Decision Date: 27 February 2008
• Docket Number: Civil No. JFM 07-2671.
• Citation: 535 F.Supp.2d 532
• Parties: Theresa BAO, Plaintiff, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Maryland

535 F.Supp.2d 532

Theresa BAO, Plaintiff, v. LIBERTY MUTUAL FIRE INSURANCE COMPANY, Defendant.

Civil No. JFM 07-2671.

United States District Court, D. Maryland.

February 27, 2008.

Luiz R.S. Simmons, Auerbach and Simmons, Silver Spring, MD, for Plaintiff.

Mark Joseph Stiller, V. Timothy Bambrick, Niles Barton and Wilmer LLP, Baltimore, MD, for Defendant.

OPINION

J. FREDERICK MOTZ, District Judge.

Plaintiff Theresa Bao has brought suit against defendant Liberty Mutual Fire Insurance Company ("Liberty") alleging breach of contract arising out of a denial of insurance coverage. (Compl. ¶¶ 16-7.) Plaintiff seeks damages in the amount of $85,000 plus interest and the costs of this action. (Id. ¶ 9.) Defendant has moved for summary judgment, and plaintiffs opposition and defendant's reply have followed. For the reasons detailed below, I will grant defendant's motion.

I.

The evidence on the summary judgment record is as follows. On or about June 2, 2006, a strong wind and rain storm hit the Baltimore region, and a substantial amount of water entered plaintiffs home. (Pl.'s Opp'n Mem. at 1.) Prior to the loss, plaintiff had entered into an all risk insurance policy with Liberty, entitled Liberty Mutual H03 Homeowners Deluxe Policy ("the policy"). (Id., Ex. 6, Liberty June 27, 2006 Denial Letter). The policy had an effective period from March 22, 2006 through' March 22, 2007, and was thus in effect at the time of the loss. (Id.) Immediately following the loss, plaintiff contacted Liberty, which allegedly provided the name and number for "Service Master Baltimore," a Liberty-preferred clean-up contractor. (Id. at 2.) Service Master Baltimore, which plaintiff hired to assist in the clean-up of the property damage on June 4, 2006, reported that the "[g]lass door broke[,] causing rain water to come into the home." (Id. (citing Ex. 2, Service Master Baltimore Invoice).)

Plaintiffs and Liberty's licensed certified public adjusters met to inspect the damage to the property on June 13, 2006.¹ (Id. at 3-4.) Plaintiffs adjuster, Jeffrey Gould of American Claims Management Services ("ACMS"), determined that "[t]he loss followed a wind and rainstorm and was the result of rainwater entering the basement of the property as a consequence of wind damaging a sliding glass door." (Gould Aff. ¶ 5.) More specifically, Gould reported that damage to the door frame at the height of approximately three feet indicated that "the loss [wa]s due to an object blown by the wind into the sliding glass door." (Id. ¶¶ 8-9.) As a result, according to Gould, water entered the basement both by way of rain that continued to fall during the duration of the storm, and a pool of rain that had gathered at the bottom of the basement stairwell. (Id. ¶ 8.)

Liberty's adjuster, Tim Iannuzzi of North American Claims Specialists ("NCAS"), concluded after his June 13, 2006 inspection that the glass door was not broken by an object blown by the wind, but by pressure exerted on the glass door by accumulated water in a basement stairwell. (Iannuzzi Aff. ¶¶ 8-9.) Iannuzzi reported that physical evidence at the scene indicated that "approximately 10-15 inches of water accumulated in the bottom of the basement walkout steps[,] [while] [i]nside the home there were water marks approximately 10-12 inches high on the walls and door frames."² (Id. ¶ 9.) Because Liberty concluded that the pressure exerted by the excessive water caused the glass to break, it denied plaintiffs claim on June 27, 2006. (Pl.'s Opp'n Mem., Ex. 6.) Liberty cited SECTION I — EXCLUSIONS to justify its denial:

1. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence of loss ...

c. Water Damage, meaning:

(1) Flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by wind;

(2) Water which backs up through sewers or drains or which overflows from a sump; or

(3) Water below the surface of the ground, including water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool, or other structure.

(Id. (citing Ex. 1, "Insurance Policy" at 8).)

II.

Summary judgment is appropriate when there is no genuine issue of material fact and the moving party can demonstrate that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A material fact is one that may affect the outcome of the suit. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The facts will be construed in the light most favorable to, and all justifiable inferences will be drawn in favor of, the non-moving party. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

Under Maryland law, "insurance policies are interpreted in the same manner as contracts generally." Catalina Enters. v. Hartford Fire Ins. Co., 67 F.3d 63, 65 (4th Cir.1995) (citing Collier v. MD-Individual Practice Ass'n, 327 Md. 1; 607 A.2d 537, 539 (1992)). The primary purpose "in construing insurance contracts, like all contracts, is to ascertain and give effect to the intention of the parties at the time of contracting." Id. (citing Aragona v. St. Paul Fire and Marine Ins. Co., 281 Md. 371, 378 A.2d 1346, 1348 (1977)).

Insurance policies "are not in the first instance construed most strongly against the, insurer." United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 495 (4th Cir.1998) (citing Collier, 607 A.2d at 539). Rather, Maryland courts "interpret insurance policies as a whole, according words their usual, everyday sense, giving force to the intent of the parties, preventing absurd results, and effectuating clear language." Id. The court may also look to "the character of the contract, its object and purposes, and the factual circumstances of the parties at the time of the execution.", Catalina, 67 F.3d at 65. "If the language of the contract is ambiguous, extrinsic evidence may be consulted to determine the intention of the parties." Sallie v. Tax Sale Investors, Inc., 149 Md. App. 141, 814 A.2d 572, 578 (Md.Ct. Spec.App.2001). On the other hand, "clear and unambiguous language ... must be enforced as written and may not yield to what the parties later say they meant." Id. (citing Bd. of Trs. of State Colls. v. Sherman, 280 Md. 373, 378 A.2d 626, 629 (1977)).

III.

The issue on summary judgment is whether Liberty has established as a matter of law that plaintiffs loss is excluded pursuant to the policy. An insurer has the burden of establishing that the policy excludes a particular loss. Nat'l Elec. Mfrs. Assoc. v. Gulf Underwriters Ins. Co., 162 F.3d 821, 824 (4th Cir.1998). However, if the insurer successfully establishes that the loss is excluded, the burden shifts to the insured to demonstrate that the damage falls within an exception to the exclusion. See Simkins Indus., Inc. v. Lexington Ins. Co., 42 Md.App. 396, 401 A.2d 181, 184 (Md.Ct.Spec.App.1979); McEvoy v. Sec. Fire Ins. Co., 110 Md. 275, 73 A. 157, 159-60 (1909).

Liberty contends that the policy expressly excluded plaintiff's loss. (Def.'s Mem. at 7.) Plaintiffs policy with Liberty excluded coverage "for loss caused directly or indirectly by [water damage,] ... regardless of any other cause or event contributing concurrently or in any sequence of loss." (Insurance Policy at 8 (Section I — Exclusions(1.)(c)).) The policy defined "water damage" in relevant part as "[f]lood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by wind." (Id. (Section I(1.)(c)(1)) (emphasis added).) Plaintiff's adjuster, Gould, reported, and plaintiff has argued, that the loss was caused in part by both "rain that continued to fall for the duration of the storm" and "a pool of rain that had gathered at the bottom of the stairwell." (Gould Aff. ¶ 8; Pl.'s Opp'n ¶ 7; Pl.'s Opp'n Mem. at 2, 5.) Liberty does not dispute that these were the causes. (Def.'s Reply at 2.) Accordingly, the parties' textual arguments center around whether these sources of water constitute "water damage" as defined in the policy.

Liberty argues persuasively that a pool of rainwater constitutes "surface water," which the policy included under its definition of "water damage." (Id. at 2-3.) Maryland courts have held that "surface water [is] caused by rain or melting snow." City of Cumberland v. Willison, 50 Md. 138, 1878 WL 6579 at *6 (1878); see also Mateer v. Reliance Ins. Co., 247 Md. 643, 233 A.2d 797, 799 (1967) (holding in an insurance policy dispute case that "surface waters are those which are produced by rainfall, melting snow or springs"). Other jurisdictions have also defined "surface water" to include a pool of rainwater. See T.H.E. Ins. Co. v. Charles Boyer Children's Trust, 455 F.Supp.2d 284, 296-97 (M.D.Pa.2006) ("[S]urface waters are commonly understood to be waters on the surface of the ground, usually created by rain or snow, which are of a casual or vagrant character, following no definite course and having no substantial or permanent existence.") ("[R]ainfall that collects outside of a building and subsequently flows into that building is `surface water' for purposes of the surface water exclusion."); O'Neill v. State Farm Ins. Co., No. 94-3428, 1995 WL 214409, at *3 (E.D.Pa. Apr. 7, 1995) ("Surface water is water which has diffused over the surface of the ground and is derived from falling rain or melting snow.") (internal quotation marks omitted); State Farm Fire & Cas, Co. v. Paulson, 756 P.2d 764, 767 (Wyo. 1988) (citing a hydrology expert's answer that "after rain falls to the ground ... it becomes either surface water or if it infiltrates it becomes underground water").

Plaintiff argues in opposition that because "falling rain" or "rainwater" are "specifically not listed as part of the water...