Hartford Acc. & Indem. Co. v. Phelps, U--164

• Decision Date: 21 May 1974
• Docket Number: No. U--164,U--164
• Citation: 294 So.2d 362
• Parties: HARTFORD ACCIDENT AND INDEMNITY COMPANY, a corporation, Appellant, v. Norwood M. PHELPS, and Minnie Louise Phelps, his wife, Appellees.
• Court: Florida District Court of Appeals

Page 362

294 So.2d 362

HARTFORD ACCIDENT AND INDEMNITY COMPANY, a corporation, Appellant, v. Norwood M. PHELPS, and Minnie Louise Phelps, his wife, Appellees.

No. U--164.

District Court of Appeal of Florida, First District.

May 21, 1974.

Delbridge L. Gibbs, of Marks, Gray, Conroy & Gibbs, Jacksonville, for appellant.

Raymond E. Watson, of Webb, Swain & Watson, Jacksonville, for appellees.

McCORD, Judge.

This is an appeal from a final judgment of the Circuit Court of Duval County entered in appellee's (plaintiffs') favor following a summary judgment in their favor in a suit brought by them on an insurance policy issued by appellant (defendant) covering appellees' home. The home suffered damage resulting from an underground leak in a water pipe under the house beneath the concrete slab floor. The leak washed out a hole causing damage and upon the water being pumped from beneath the house in repairing it, the house settled causing additional damage.

The insurance policy was a home owner's 'all-risks' policy which covered the dwelling and its appurtenances 'against all risks of physical loss to the property covered.' The policy also covers 'accidental discharge, leakage or overflow of water or steam from within a plumbing, heating or air conditioning system . . .' It further provides, 'If loss by water not otherwise excluded ensues, this policy shall also cover the cost of tearing out and replacing any part of the building covered required to effect repairs to the plumbing, heating, or air conditioning system . . .'

Appellant denied liability because of an exclusion of coverage for damage from 'water below the surface of the ground including that which exerts pressure on or flows, seeps or leaks through windows, driveways, foundations, walls, basement or other floors or through doors, windows or any other openings in such sidewalks, driveways, foundations, walls, or floors.' Appellant also contends that the policy does not cover the damage sustained by appellee because under the heading 'Perils Insured Against,' the policy provides as follows:

'13. Collapse of buildings or any part thereof, but collapse does not include settling, cracking, shrinkage, bulging or expansion.'

In addition, appellant contends that even if the loss is found to be compensable under the policy, appellees are barred from recovery because they failed to give appellant proper notice of loss and furnish proof of loss as required by the policy.

As to the first point, it is our view that the pipe which developed the leak was within and a part of the plumbing system of the house although it was buried in the ground below the house. Thus, we must reconcile the two provisions of this 'allrisks' policy--one which covers damage from leaking of water within the plumbing system and the other which excludes damage from water below the surface of the ground.

From the previously quoted wording of the policy, we consider that the underground water exclusion does not have reference to leaks within the plumbing system of the house. Having specifically covered plumbing system leaks, the insurer, if it had intended to exclude underground leaks in the plumbing system, would or should have specifically said so. The general rule as quoted from Roach v. Churchman, 431 F.2d 849 (8th Cir. 1970), in King v. Travelers Insurance Company, 84 N.M. 550, 505 P.2d 1226 (1973) is as follows:

'* * * (E)xceptions, limitations and exclusions to insuring agreements require a narrow construction on the theory that the insurer, having affirmatively expressed coverage through broad promises, assumes a duty to define any limitations upon that coverage in clear and explicit terms. * * *'

When we consider the terminology used in the exclusion clause in pari materia with the affirmative statement of coverage from leaks in the plumbing system, we conclude that the exclusion was intended to relate only to damage from water not emanating from the plumbing system.

In King v. Travelers Insurance Company, supra, the Supreme Court of New Mexico considered a case quite similar to the case sub judice. The insurance policy there under consideration afforded identical coverage with the policy here involved and the damage resulted from a leak in the plumbing system within the foundation boundaries of the house, as is the case here. Also as here, the leak was underneath a concrete floor slab and the insurer claimed that the loss was excluded under an identical exclusion provision for underground water. The court there said:

'. . . the contract must be construed, whenever possible, to give effect to both provisios of the policy, that is, the insuring clause and the excepting clause.

It is not unreasonable to assume that the loss or damage intended to be excepted by the words 'water below the surface of the ground' was like the other losses as would result from causes having no connection with the 'plumbing system.'

This, of course, is counter to Appellee's argument that 'in order for there to be coverage, the damage would have had to result from water that was not below the surface.' However, Appellee ignores the fact that a great part of many plumbing systems, by necessity, are installed below the ground. Presumably, if an insurer desired to exclude from coverage that part of the plumbing system which is below the surface of the ground after specifically...