Horizon III Real Estate v. Hartford Fire Ins. Co., 00-CV-2420 JMR/RLE.

• Decision Date: 11 February 2002
• Docket Number: No. 00-CV-2420 JMR/RLE.,00-CV-2420 JMR/RLE.
• Citation: 186 F.Supp.2d 1000
• Parties: HORIZON III REAL ESTATE v. HARTFORD FIRE INSURANCE COMPANY
• Court: U.S. District Court — District of Minnesota

186 F.Supp.2d 1000

HORIZON III REAL ESTATE v. HARTFORD FIRE INSURANCE COMPANY

No. 00-CV-2420 JMR/RLE.

United States District Court, D. Minnesota.

February 11, 2002.

Michael T. Tierney, Clure Eaton Butler Michelson Ferguson & Person, Duluth, MN, for plaintiff.

Daniel A. Haws, Mark S. Brown, Murnane Conlin White & Brandt, St. Paul, MN, for defendant.

ORDER

ROSENBAUM, Chief Judge.

On December 20, 2001, the Honorable Raymond L. Erickson, United States Magistrate Judge, issued a Report and Recommendation in this action. Neither party filed timely objections to the Report, pursuant to Local Rule 72.1(c)(2).

Accordingly, IT IS ORDERED that:

Defendant's motion for summary judgment [Docket No. 9] is granted.

REPORT AND RECOMMENDATION

I. Introduction

This matter came before the undersigned United States Magistrate Judge pursuant to a special assignment, made in accordance with the provisions of Title 28 U.S.C. § 636(b)(1)(B), upon the Defendant's Motion for Summary Judgment. A Hearing on the Motion was conducted on October 26, 2001, at which time the Plaintiff Horizon III Real Estate ("Horizon") appeared by Michael T. Tierney, Esq., and the Defendant Hartford Fire Insurance Company ("Hartford") appeared by Mark S. Brown, Esq. For reasons which follow, we recommend that the Defendant's Motion for Summary Judgment be granted.

II. Factual and Procedural Background

Horizon owns the Howard Terrace office building in Hibbing, Minnesota. On the night of July 4, 1999, a severe rainstorm hit the Hibbing area, causing a large amount of rain to fall. On the morning of July 5, 1999, Rolland Maki ("Rolland"), who is one of three partners owning Horizon, was advised by his brother that there was flooding at the Howard Terrace. When Rolland arrived at the building, he found six inches of water standing on the basement floor.

The course the water took before it arrived on the basement floor is disputed by the parties. Hartford asserts that the water backed up, into the basement, when it could not drain into the City's sewer system, which had been overwhelmed by the excessive rains. To support this assertion, Hartford has submitted the Affidavit of David Williams ("Williams"), a professional engineer who has been retained by Hartford. Williams, who investigated the cause of the flooding of the building, has concluded, in pertinent part, as follows:

It is your affiant's opinion, to a reasonable degree of engineering certainty, that the Howard Terrace basement flooded because the excessive rain water draining from the roof was forced back up the vent stacks when the City's sewer and storm * * * system's capacity was exceeded by the volume of water from the storm.

Affidavit of David Williams, at ¶ 9.

Williams expressed this opinion, even though there was "little if any raw sewage" observed on the floor of the women's bathroom, from which the water was expelled, due to the fact that the bulk of water, that backed-up, would have been water that drained from the roof, and not from the sewer system. Id. at ¶ 11.

In contrast, after a similar investigation, Otto W. Maki ("Maki"), a professional engineer who was retained by Horizon, has expressed a different opinion. Maki believes that, due to the rainstorm, the pipes which drain the water from the Howard Terrace's flat roof, through the building's internal plumbing system, were unable to drain the water quickly enough and, consequently, filled with water, thereby creating a uniform pressure on the drain pipe surfaces below the roof. See, Affidavit of Otto W. Maki, at 2. The pressure created by the weight of water eventually blew the cap off the drain pipe's "clean out" fixture which is located in the bathroom on the lower level of the building. Id. When the cap blew off, the water from the drain pipe spilled into the basement of the building. Id. Maki specifically rejects the suggestion that the water "backed-up" as, in his view, "[b]ack up means that water (or sewage) was traveling against the intended direction of water flow."¹ Id.

Hartford now seeks Summary Judgment, claiming that the damage, which Holland Terrace sustained, was caused by water back-up as a result of excessive rain onto the roof of Horizon's building and, therefore, the applicable insurance coverage limited to $25,000.00, by virtue of the "Stretch Coverage," and, since it has already remitted that amount to Horizon, nothing further is owed, under the applicable insurance policy, as a matter of law. For its part, Horizon contends that this is not an incident of water back-up, under the language of the insurance policy, and as that term is employed by its consulting engineer, and therefore, the policy limit, upon which Hartford relies, should not apply.

II. Discussion

A. Standard of Review. Summary Judgment is not an acceptable means of resolving triable issues, nor is it a disfavored procedural shortcut when there are no issues which require the unique proficiencies of a Jury in weighing the evidence, and in rendering credibility determinations. See, Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary Judgment is appropriate when we have viewed the facts, and the inferences drawn from those facts, in a light most favorable to the nonmoving party, and we have found no triable issue. See, Krentz v. Robertson, 228 F.3d 897, 901 (8th Cir.2000); Curry v. Crist, 226 F.3d 974, 977 (8th Cir.2000); Carter v. St. Louis Univ., 167 F.3d 398, 400 (8th Cir. 1999). For these purposes, a disputed fact is "material" if it must inevitably be resolved, and the resolution will determine the outcome of the case, while a dispute is "genuine" if the evidence is such that a reasonable Jury could return a verdict for the nonmoving party. See, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Herring v. Canada Life Assurance, 207 F.3d 1026 (8th Cir.2000); Liebe v. Norton, 157 F.3d 574, 578 (8th Cir.1998); Dodd v. Runyon, 114 F.3d 726, 729 (8th Cir.1997).

As Rule 56(e) makes clear, once the moving party files a properly supported Motion, the burden shifts to the nonmoving party to demonstrate the existence of a genuine dispute. In sustaining that burden, "an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavit or as otherwise provided in this Rule, must set forth specific facts showing that there is a genuine issue for trial." Rule 56(e), Federal Rules of Civil Procedure; see also, Anderson v. Liberty Lobby, Inc., supra at 256, 106 S.Ct. 2505; Allen v. Entergy Corp., 181 F.3d 902, 904 (8th Cir.1999); Jaurequi v. Carter Manufacturing Co., 173 F.3d 1076, 1085 (8th Cir.1999). Moreover, the movant is entitled to Summary Judgment where the nonmoving party has failed "to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, supra at 322, 106 S.Ct. 2548; see also, Hammond v. Northland Counseling Center, Inc., 218 F.3d 886, 891 (8th Cir.2000); Greer v. Shoop, 141 F.3d 824, 826 (8th Cir.1998). No genuine issue of fact exists in such a case because "a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, supra at 323, 106 S.Ct. 2548; see also, Bell Lumber and Pole Co. v. United States Fire Ins. Co., 60 F.3d 437, 441 (8th Cir.1995); McLaughlin v. Esselte Pendaflex Corp., 50 F.3d 507, 510 (8th Cir.1995); Settle v. Ross, 992 F.2d 162, 163 (8th Cir.1993).

B. Legal Analysis. Ultimately, the parties' opposing arguments devolve to divergent interpretations of the applicable policy language. Under Minnesota law, which is applicable in this diversity action, it is settled that the interpretation of an insurance contract is a question of law. See, Winthrop and Weinstine, P.A. v. Travelers Cas. and Sur. Co., 993 F.Supp. 1248, 1254 (D.Minn.1998) (applying Minnesota law); Watson v. United Services Automobile Ass'n, 566 N.W.2d 683, 688 (Minn.1997); Meister v. Western Nat. Mut. Ins. Co., 479 N.W.2d 372, 376 (Minn. 1992); Glass Service Co. v. Progressive Specialty Ins. Co., 603 N.W.2d 849, 851 (Minn.App.2000). In interpreting an insurance contract, the contract is to be construed as a whole, see, Watson v. United Automobile Ass'n, supra at 693; Henning Nelson Constr. Co. v. Fireman's Fund Amer. Life Ins. Co., 383 N.W.2d 645, 652 (Minn.1986); Canadian Universal Ins. Co., Ltd. v. Fire Watch, Inc., 258 N.W.2d 570, 572 (Minn.1977), and, when the language of the insurance policy is clear and unambiguous, the language employed must be given its usual and accepted meaning. See, Lobeck v. State Farm Mut. Ins. Co., 582 N.W.2d 246, 249 (Minn.1998), citing Bobich v. Oja, 258 Minn. 287, 104 N.W.2d 19, 24 (1960).

If an ambiguity in the language of an insurance contract exists, then the Court is obliged to construe the ambiguity against the insurer, and in favor of the insured. See, Noran Neurological Clinic v. The Travelers Indem. Co., 229 F.3d 707, 708 (8th Cir.2000)(applying Minnesota law); American Commerce Ins. Brokers, Inc. v. Minnesota Mut. Fire and Cas. Co., 551 N.W.2d 224, 227 (Minn.1996). The language of an insurance policy, however, is ambiguous only if it can reasonably be given more than one meaning. See, American Commerce Ins. Brokers, Inc. v. Minnesota Mut. Fire and Cas. Co., supra; General Mills, Inc. v. Gold Medal Ins. Co., 622 N.W.2d 147, 153 (Minn.App.2001); Lhotka v. Illinois Farmers Ins. Co., 572 N.W.2d 772, 773 (Minn.App.1998). In undertaking such an assessment, the Court must fastidiously guard against any invitation to "create ambiguities" where there are none. Noran Neurological Clinic v. The Travelers Indemnity Co., 229 F.3d 707, 708 (8th Cir.2000) (applying Minnesota law). Nevertheless, "Minnesota courts have been quite clear that the initial existence of a...