In re Stenersen Corp.
| Decision Date | 08 April 1986 |
| Docket Number | Adv. No. 82-1466-B,Civ. A. No. M-84-1955.,Bankruptcy No. 81-2-3237 |
| Citation | 61 BR 702 |
| Parties | In re STENERSEN CORPORATION, (Debtor). STENERSEN CORPORATION, (Appellant), v. Louis O. GIUFFRIDA, Director of Federal Emergency Management and The Federal Emergency Management Agency, (Appellees). |
| Court | U.S. District Court — District of Maine |
Gary A. Goldstein, Robert A. Gordon, and Goldstein, Rubenstein & Sher, P.A., Baltimore, Md., for appellant.
Breckinridge L. Willcox, U.S. Atty. for the District of Maryland, William D. Quarles, Asst. U.S. Atty., Baltimore, Md., and Susan Kantor Bank, Asst. Gen. Counsel, Federal Emergency Management Agency, Washington, D.C., for appellees.
On March 13, 1984, United States Bankruptcy Judge James F. Schneider, after considering the evidence presented at the trial of this case, denied appellant, Stenersen Corp., relief under its Standard Flood Insurance Policy ("SFIP") with the Federal Emergency Management Agency ("FEMA") (Bankruptcy Paper No. 29). Stenersen Corp. filed a Notice of Appeal (Bankruptcy Paper No. 30), and appellees, Louis O. Giuffrida and FEMA, of which Giuffrida is the Director, filed a Notice of Cross-Appeal (Bankruptcy Paper No. 31). Both parties filed their statements of issues and designations of contents for inclusion in the record on appeal (Bankruptcy Paper Nos. 32, 33).
In accordance with Bankruptcy Rule 8009, the appellant and the appellees have filed their respective briefs (Paper Nos. 4-6). In addition, the transcript of, and exhibits from, the proceedings before Judge Schneider have been filed (Bankruptcy Paper No. 28). After reviewing the record in this case and the briefs submitted by counsel, the court concludes that the facts and legal arguments are adequately presented in them and the decisional process would not be significantly aided by oral argument. Bankruptcy Rule 8012.
In its Complaint (Bankruptcy Paper No. 1), appellant alleged that on September 5, 1979, a flood occurred which caused certain damage to its property.1 Trial was conducted in this case, in which the principal issues were identified by the Bankruptcy Court as follows: "(1) whether the damage complained of by Stenersen was caused by a flood, and, therefore was `flood-related' within the terms of the standard flood insurance policy; and (2) whether there was any compensable injury to the subject property due to the `flood-related' damage." (Bankruptcy Paper No. 29 at 3).
After trial, the Bankruptcy Court concluded that Stenersen and the United States had executed a SFIP, Policy No. 0057-9798, for the subject property; that a flood caused by Hurricane David occurred at the subject property on or about September 5, 1979; and that the terms of the policy were in effect at the time of said flood (id. at 4). It further found that "the only portion of the property at issue was the floor of the north section of the subject warehouse"; that Stenersen had previously received certain monies as compensation for the contents of the subject warehouse and for other structural damage on the basis of the September 5, 1979 flood; and that the parties had stipulated that the compensation sought by Stenersen for the alleged damage to the north section of the warehouse is $24,351.99 (id. at 4-5).
The floor of the north section of the subject warehouse is a floating floor slab, comprising 8,280 square feet, and is supported by the walls of five steel compartment vaults, which walls are in turn supported by a substructure of earthen fill (id. at 8). Approximately 2½ years after September 5, 1979, a "hairline" crack approximately fifty feet in length appeared in the north floor slab running approximately east to west (id. at 9). Prior to September 5, 1979, representatives of Stenersen did not observe any reduction in height of the north floor slab, but following this date James S. Stenersen, Jr. discovered that this floor slab had suffered a reduction in height of 2½ inches from its former position (id. at 9).
The Bankruptcy Court further found that "after the flood on September 5, 1979, the water reached a level of approximately eight feet within the subject property," and that flood waters entered the underground compartments and a substantial volume of water flowed beneath the north floor slab thereby eroding and washing out the earthen fill beneath this slab, creating a void between the floor slab and the remaining earthen fill (id. at 10). The Bankruptcy Court found that the earthen fill washed through the north wall of the warehouse building by means of the porous cinder blocks and the cracks between them, causing the north wall to crack and bulge at the points where the earthen fill exited (id. at 10).
With respect to the terms of the SFIP, the Bankruptcy Court noted:
(Id. at 10-11).
After considering the testimony of the experts, the Bankruptcy Court concluded that water from the flood eroded and washed away the earthen fill beneath the floor slab, and flowed through the porous cinder block and through exit points in the north wall, and concluded that "the subsidence of the north floor slab was flood-related because it was the proximate result of erosion and washout of earthen fill caused by on-rushing flood waters," and that it was, therefore, covered by the terms of the SFIP (id. at 13-14).
(Id. at 13). It concluded, therefore, that appellant had suffered no injury from this occurrence and could not recover under the SFIP (id. at 14).
Appellant asserts that the Bankruptcy Court's ruling, finding that appellant's property had suffered erosion from flood, a type of damage covered by the SFIP, but that appellant had suffered no compensable damage, is inconsistent and, therefore, clearly erroneous. Appellant contends that the decision should be reversed and that appellant should recover the cost of repair and replacement of the damaged property, as that amount was established by stipulation between the parties.
FEMA and Giuffrida, cross-appellants/appellees, assert that this court should affirm the Bankruptcy Court's decision to the extent that it found that appellant suffered no compensable damage. They further assert, however, that the decision should be reversed to the extent it concluded that the damage, if any, is covered by the terms of the SFIP.
The factual findings of a bankruptcy judge must be accepted by the district court unless clearly erroneous. Bankruptcy Rule 8013; In the Matter of Urban Development Company and Associates, 452 F.Supp. 902, 905 (D.Md.1978). Due regard is to be given to a bankruptcy judge's opportunity to determine issues of credibility of witnesses. Bankruptcy Rule 8013; In re County Green Ltd. Partnership, 438 F.Supp. 693, 694 (W.D.Va.1977). Legal conclusions made by a bankruptcy judge, however, may not be approved by the district court on review without an independent determination. Hunter Savings Ass'n v. Baggott Law Offices Co., 34 B.R. 368, 374 (S.D.Ohio 1983); In re Hollock, 1 B.R. 212, 215 (M.D.Pa.1979). Finally, on appeal, the district court is free to draw inferences or deductions different from those of a bankruptcy court on documentary, undisputed, and stipulated evidence. In re Day, 4 B.R. 750, 752 (S.D.Ohio 1980).
FEMA and Giuffrida assert on appeal that, even if it were found that Stenersen's alleged damages constituted a "direct loss by flood" within the SFIP, recovery is nonetheless precluded under the "perils excluded" section of the policy....
To continue reading
Request your trial