Kula v. State Farm Fire and Cas. Co.

• Decision Date: 09 June 1995
• Citation: 628 N.Y.S.2d 988,212 A.D.2d 16
• Parties: Joseph E. KULA and Katherine M. Kula, Appellants-Respondents, v. STATE FARM FIRE AND CASUALTY COMPANY, Respondent-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 988

628 N.Y.S.2d 988

212 A.D.2d 16

Joseph E. KULA and Katherine M. Kula, Appellants-Respondents, v. STATE FARM FIRE AND CASUALTY COMPANY, Respondent-Appellant.

Supreme Court, Appellate Division,

Fourth Department.

June 9, 1995.

Law Offices of Laurence D. Behr by Laurence Behr, Buffalo, for appellants-respondents.

Jaeckle, Fleischmann and Mugel by Mary Fitzgerald, Buffalo, for respondent-appellant.

Before PINE, J.P., and LAWTON, WESLEY, CALLAHAN and BOEHM, JJ.

CALLAHAN, Justice:

This appeal involves an interpretation of the "earth movement" exclusion in an insurance policy issued by defendant, State Farm Fire and Casualty Company (State Farm), to plaintiffs. Plaintiffs contend that the "earth movement" exclusion applies only to losses resulting from natural causes and does not apply to a situation where, as here, a broken water pipe caused the soil beneath plaintiffs' home to wash away. On the other hand, State Farm contends that the "earth movement" exclusion of its policy clearly and unambiguously excludes coverage for losses arising from earth movement, regardless of the cause, whether natural or human.

Plaintiffs own a home that was covered by a homeowners policy issued by State Farm. On February 15, 1991, plaintiff Joseph Kula discovered a crack in his basement floor, removed part of the floor, and found "a large, empty cavity where there should have been solid earth and stone" under the house. An underground water pipe carrying well water to plaintiffs' home had ruptured. Mr. Kula determined that "the flow of water [approximately 125 gallons of water per minute] must have washed out the dirt that was supporting one corner of the house" causing the "footer upon which the foundation rests" to "sink". State Farm inspected the premises and concluded that the saturated soil slid downhill, carrying a section of the house with it, causing the house to split apart. State Farm then sent plaintiffs a letter denying coverage based on the following exclusion clause in its policy:

"SECTION I--LOSSES NOT INSURED

* * * * * *

2. 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

* * * * * *

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. Earth movement also includes volcanic explosion or lava flow, except as specifically provided in SECTION I, ADDITIONAL COVERAGES for Volcanic Action. We do insure for any direct loss by fire, explosion other than explosion of a volcano, theft, or breakage of glass or safety glazing materials resulting from earth movement" (emphasis added).

Plaintiffs commenced this action to recover for the damages to their home, alleging that the "sudden and accidental discharge and overflow of water" was covered in their homeowners policy. State Farm in its answer denied coverage based on the above "earth movement" exclusion. State Farm moved for summary judgment dismissing plaintiffs' action on the ground that the "earth movement" exclusion in its policy clearly and unambiguously excludes coverage for this loss. Plaintiffs opposed the motion and cross-moved for partial summary judgment declaring that defendant is obligated to pay plaintiffs' loss. Plaintiffs asserted that the "earth movement" exclusion did not apply because "the damage to their house was not caused by any natural or cataclysmic phenomenon as clearly contemplated by State Farm's 'earth movement' exclusion". Supreme Court denied both motions.

Each party contends that summary judgment should be granted in its favor, and that the court erred in denying summary judgment.

Plaintiffs contend that State Farm did not present sufficient evidence to substantiate its version of the facts, and that the affidavit of its attorney is insufficient because he had no personal knowledge of the facts. That affidavit concludes, based on State Farm's inspection of the damage, that the water pipe rupture caused the ground to become saturated, and then to "slide downgrade", and that the "sliding ground caused the foundation of the house to shift". The affidavit of Joseph Kula disputes that version of the facts, attesting that, when he looked under his basement floor, he found "a large, empty cavity where there should have been solid earth and stone" under the house, and that "the flow of water must have washed out the dirt that was supporting one corner of the house" causing the "footer upon which the foundation rests" to "sink". State Farm has accepted plaintiffs' version of the facts for the purpose of the summary judgment motion. As such, the sole issue is a legal interpretation of the contract of insurance in light of the agreed facts.

It is the province of the courts to interpret written instruments (Hartford Acc. & Indem. Co. v. Wesolowski, 33 N.Y.2d 169, 172, 350 N.Y.S.2d 895, 305 N.E.2d 907; Mallad Constr. Corp. v. County Fed. Sav. & Loan Assn., 32 N.Y.2d 285, 291, 344 N.Y.S.2d 925, 298 N.E.2d 96). Where the language of a contract is clear and unambiguous, interpretation of that contract and construction of its provisions are questions of law (Loblaw, Inc. v. Employers' Liab. Assur. Corp., 57 N.Y.2d 872, 876, 456 N.Y.S.2d 40, 442 N.E.2d 438, affg. 85 A.D.2d 880, 446 N.Y.S.2d 743). The court must ascertain the intent of the parties from the plain meaning of the language employed, giving terms their plain, ordinary, popular and non-technical meanings (United States Fid. & Guar. Co. v. Annunziata, 67 N.Y.2d 229, 232, 501 N.Y.S.2d 790, 492 N.E.2d 1206; Benderson Dev. Co. v. Schwab Bros. Trucking, 64 A.D.2d 447, 456, 409 N.Y.S.2d 890).

On the other hand, where a particular provision is susceptible to more than one reasonable interpretation, all ambiguities must be resolved in favor of the insured (Breed v. Insurance Co. of N. Amer., 46 N.Y.2d 351, 353, 413 N.Y.S.2d 352, 385 N.E.2d 1280). That is particularly true of exclusion clauses, which are always, as a matter of interpretation, strictly construed against the insurer (see, Cone v. Nationwide Mut. Fire Ins. Co., 75 N.Y.2d 747, 749, 551 N.Y.S.2d 891, 551 N.E.2d 92). State Farm bears the burden of establishing that its construction of the exclusionary clause is reasonable and that its interpretation is the only fair construction of the policy language at issue (Venigalla v. Penn Mut. Ins. Co., 130 A.D.2d 974, 975, 515 N.Y.S.2d 939, appeal dismissed 70 N.Y.2d 747, 519 N.Y.S.2d 1034, 514 N.E.2d 392).

We recognize that "[a] court may neither make nor vary an insurance contract by extending coverage beyond the fair intent and meaning of the agreement, and the liability of the insurer cannot be enlarged by implication...