Chase v. State Farm Fire and Cas. Co.

• Decision Date: 13 September 2001
• Docket Number: No. 99-CV-759.,99-CV-759.
• Citation: 780 A.2d 1123
• Parties: Florence CHASE, Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, Appellee.
• Court: D.C. Court of Appeals

780 A.2d 1123

Florence CHASE, Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, Appellee.

No. 99-CV-759.

District of Columbia Court of Appeals.

Argued April 24, 2000.

Decided September 13, 2001.

Joel C. Mandelman, Arlington, VA, for appellant.

Richard E. Schimel, Bethesda, MD, for appellee.

Before FARRELL, REID, and GLICKMAN, Associate Judges.

GLICKMAN, Associate Judge:

Florence Chase's home collapsed after a water overflow from a burst pipe caused the movement of soil beneath the foundation of the house. Chase had homeowners insurance under a policy issued by State Farm Fire and Casualty Company ("State Farm"), but State Farm denied coverage on the ground that the damage fell within an exclusion in the policy for losses attributable to "earth movement." The trial court granted summary judgment in favor of State Farm, and Chase has appealed. We are constrained to hold that the State Farm policy unambiguously excludes coverage for Chase's loss. Our holding is subject, however, to the potential applicability of a provision in the "additional coverages" section of the policy that neither party has addressed. We remand solely for consideration of that provision.

I.

Chase bought her home in August of 1986 for $32,000. The main water pipes, along with a hot water heater, a furnace and a sump pump, were located directly underneath the structure, in an enclosed crawl space. The crawl space was uninsulated, and each winter the pipes would freeze, burst, and have to be repaired. On February 5, 1996, a "bitter cold" day, Chase came home from work and heard water running. She looked in the crawl space and saw that approximately three feet of water had accumulated from a burst pipe. Chase called the Water and Sewer Authority to shut off the water supply, and then left to stay at her mother's house. At some point in the next few days, Chase returned to her house, did not hear water running, and checked the crawl space. She found that her sump pump had failed to drain the water, which was at the same level as on February 5. On February 12, Chase returned again, and discovered to her dismay that the living room floor had collapsed and the fireplace had separated from the wall. The extensive damage made the house uninhabitable. Chase notified State Farm the same day.

State Farm sent Edgar O. Seaquist, a structural engineer, to inspect the property. In due course Seaquist rendered the opinion that the house

had experienced a massive failure of the foundation supporting the chimney-fireplace system and the floor structure as a direct result of the vertical and horizontal movement of the earth banks at the face of the central foundation. This occurred when the soil became water saturated and its properties changed so that the soil flowed out from below the foundations, thereby eliminating the support for the chimney-fireplace system and the floor structure.

Based on Seaquist's assessment, which is uncontested, State Farm denied Chase's insurance claim. State Farm relied on the following "earth movement" exclusion in its homeowners policy:

We do not insure under any coverage for any loss which would not have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: (a) the cause of the excluded event; or (b) other causes of the loss; or (c) whether other causes acted concurrently or in any sequence with the excluded event to produce the loss; or (d) whether the event occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as a result of any combination of these:

* * *

b. Earth Movement, meaning the sinking, rising, shifting, expanding or contracting of earth, all whether combined with water or not. Earth movement includes but is not limited to earthquake, landslide, mudflow, sinkhole, subsidence and erosion.

Upon State Farm's denial of her claim, Chase filed a complaint against the company in Superior Court. In her complaint, Chase asserted causes of action based on breach of contract and negligent inspection of her property. State Farm moved for summary judgment, relying on the earth movement exclusion and Seaquist's opinion, quoted above, regarding the cause of Chase's loss.¹ The trial court granted summary judgment for State Farm on the breach of contract count, "for the reasons stated" in State Farm's summary judgment memorandum. Chase thereupon dismissed her negligent inspection count and took this appeal.

II.

A. Standards of Review, Policy Interpretation, and Burden of Proof

On appeal from a grant of summary judgment, our review is de novo, and we conduct "an independent review of the record." Drejza v. Vaccaro, 650 A.2d 1308, 1312 (D.C.1994). We employ the same substantive standard as the trial court. Summary judgment is proper if there exists no genuine issue of material fact and, on the record, the movant is entitled to judgment as a matter of law, under the appropriate burden of proof. See, e.g., Cameron v. USAA Property and Casualty Ins. Co., 733 A.2d 965, 967 (D.C. 1999)

; Nader v. de Toledano, 408 A.2d 31, 41-42 (D.C.1979). In this case, the parties do not dispute the material facts concerning the loss that Chase sustained. The propriety of summary judgment turns primarily on a question of contract interpretation—whether the earth movement exclusion in the homeowners insurance policy that State Farm issued to Chase excepts her loss from coverage. The burden of proving that Chase's loss falls within that exclusion is on State Farm. See Cameron, 733 A.2d at 969.

Our examination of the earth movement exclusion is governed by long settled principles of insurance contract interpretation. Insurance contracts are complicated and often confusing instruments, employing specialized concepts and terminology. "The phraseology of contracts of insurance is that chosen by the insurer and the contract in fixed form is tendered to the prospective policyholder who is often without technical training, and who rarely accepts it with a lawyer at his elbow." Pennsylvania Indem. Fire Corp. v. Aldridge, 73 App.D.C. 161, 162, 117 F.2d 774, 775 (1941) (quoting Aschenbrenner v. United States Fid. & Guar. Co., 292 U.S. 80, 84, 54 S.Ct. 590, 78 L.Ed. 1137 (1934)). In recognition of these realities, ambiguities in an insurance policy are construed against the insurer and in favor of "the reasonable expectations of the purchaser of the policy." Smalls v. State Farm Mut. Auto. Ins. Co., 678 A.2d 32, 35 (D.C.1996). "[T]he general rule applicable in the interpretation of an insurance policy is that, if its language is reasonably open to two constructions, the one most favorable to the insured will be adopted. Any fair doubt as to the meaning of its own words should be resolved against the insurer." Aldridge, 73 App.D.C. at 162, 117 F.2d at 775. "It is the insurer's duty to spell out in plainest terms-terms understandable to the man in the street—any exclusionary or delimiting policy provisions." Cameron, 733 A.2d at 968 (citation and internal quotation marks omitted).

If an exclusion in an insurance policy is not ambiguous, the courts must enforce "as written," without favoring one party or the other, so long as the exclusion does not violate a statute or public policy. See Smalls, 678 A.2d at 35

. Whether language in a contract is genuinely ambiguous is a question of law, and thus we consider that question de novo on appeal. We follow the guideline that, "unless it is obvious that words which appear in an insurance contract are intended to be used in a technical connotation, they will be given the meaning which common speech imports." Aldridge, 73 App.D.C. at 162,

117 F.2d at 775. We may not "indulge in forced constructions to create an obligation against the insurer." Cameron, 733 A.2d at 968 (citation and internal quotation marks omitted). Moreover, otherwise clear language in an insurance agreement is not to be deemed ambiguous "merely because the parties do not agree" on its meaning. See Byrd v. Allstate Ins. Co., 622 A.2d 691, 694 (D.C.1993). Policy language is not genuinely ambiguous unless "it is susceptible of more than one reasonable interpretation." American Bldg. Maint. Co. v. L'Enfant Plaza Prop., Inc., 655 A.2d 858, 861 (D.C. 1995) (emphasis added).

B. The Earth Movement Exclusion

State Farm invokes the exclusion in its homeowners policy for losses attributable to "earth movement" because it is undisputed, as a factual matter, that the collapse of Chase's house "would not have occurred in the absence of" such movement. As Edgar Seaquist explained, the foundation of the house failed "as a direct result of the vertical and horizontal movement of the earth banks .... when the soil became water saturated and ... flowed out from below the foundations." State Farm argues that this event fits squarely within the policy definition of "earth movement" as meaning "the sinking, rising, shifting, expanding, or contracting of earth, all whether combined with water or not," and is aptly described by one of the words used in the exclusion to illustrate that definition, "subsidence."²

Chase offers a number of reasons why the earth movement exclusion in her State Farm homeowners policy does not apply to the loss that she sustained when her water pipe ruptured, an otherwise covered risk. Her reasons boil down to four arguments. Chase argues, first, that the earth movement exclusion must be construed to apply only to events that are caused by natural forces, either because that is what the exclusion plainly says or because ambiguities in the exclusion must be resolved in her favor. Second, Chase argues that the excluded event of earth movement was not the "efficient proximate cause" of her loss. Third, Chase argues that an endorsement to her policy specifically covered the failure of her sump pump to remove the water from the foundation area of her home. Fourth, Chase argues that she had a reasonable...