Lambros v. Standard Fire Ins. Co., 15398

Decision Date05 November 1975
Docket NumberNo. 15398,15398
Citation530 S.W.2d 138
PartiesS. Peter LAMBROS et ux., Appellants, v. The STANDARD FIRE INSURANCE COMPANY, Appellee.
CourtTexas Court of Appeals

Levey & Goldstein, San Antonio, for appellants.

Joe Meador, San Antonio, for appellee.

CADENA, Justice.

Plaintiffs, S. Peter Lambros and wife, Sophia P. Lambros, appeal from a judgment rendered n.o.v., that they take nothing in their suit against defendant, The Standard Fire Insurance Company, to recover, under the so-called 'all risks' homeowner's policy, for damage allegedly caused to plaintiffs' dwelling by underground water.

In their first amended original petition, plaintiffs alleged that their dwelling 'suffered serious structural damage and structural slab collapse caused by movement of water below the ground surface exerting pressure on the foundation, floors, sidewalks, driveways, walls. . . .' In their first supplemental petition, plaintiffs, in answer to defendant's allegations that the loss suffered by plaintiff was not within the coverage afforded by the policy, but fell within certain exclusions set out by defendant in its pleading, alleged that the damage 'was caused by and resulted from water below the surface of the ground, including that which exerted pressure on (or flowed, seeped or leaked through) sidewalks, . . . foundations, walls, basements . . . or through doors, windows or any other openings in such . . . foundations, walls or floors.' Plaintiffs conceded that such loss was excluded in the standard printed policy form, but that such exclusion, being exclusion d(3), was deleted in consideration of the payment by plaintiffs of an additional premium. They further alleged, in the alternative, that the loss was caused by and resulted from 'settling, cracking, bulging, shrinkage, expansion of foundations, walls, floors, ceilings, roof structures, . . .; and that said loss was not excluded under the terms of said policy since said loss was caused by a collapse of the building or a part thereof and said loss was otherwise covered under Plaintiffs' said policy.' In its original printed form, the policy contained the following exclusion:

d. Loss caused by or resulting from:

(1) Flood, surface water, . . .;

(2) water which backs up through sewers or drains;

(3) water below the surface of the ground including that which exerts pressure on (or flows, seeps or leaks through) . . . foundations, walls, basement or other floors, . . . or through . . . openings in such . . ., foundations, walls or floors(.)

Attached to the policy is Form No. HO--353, which is captioned, 'Loss caused by water which backs up through sewers and drains and subsurface water assumption endorsement.' This endorsement reads: 'In consideration of an included addition premium, Exclusions d(2) and d(3), in the form attached to this policy, under the caption 'Perils insured Against' are hereby eliminated. . . .'

Plaintiffs' policy, then, insured against 'all risks of physical loss' except:

a. (not applicable here)

b. (not applicable here)

c. (not applicable here)

d. Loss caused by or resulting from:

(1) flood, surface water . . .;

(2) (deleted)

(3) (deleted)

e. Loss caused by or resulting from freezing . . .;

f. (not applicable)

g. Loss caused by earthquake, landslide or other earth movement;

h. (not applicable)

i. Loss caused by inherent vice, wear and tear, deterioration; rust, rot, mould or other fungi; dampness of atmosphere, . . .;

j. (not applicable)

k. Loss . . . caused by settling, cracking, bulging, shrinkage, or expansion of foundations, walls, floors, ceilings, roof structures . . .;

The foregoing Exclusions a through k shall not apply to ensuing loss caused by fire, smoke or explosion and Exclusions i, j and k shall not apply to ensuing loss caused by collapse of building, or any part thereof, water damage . . ., provided such losses would otherwise be covered under this policy.

The jury answered the special issues as follows: (1) Plaintiffs' dwelling sustained a physical loss on or about July 1, 1972. (2) The loss was caused by, or resulted from, water below the surface of the ground including that which exerted pressure on sidewalks, drives, foundations, walls, subbasements or other floors. (3) The loss was not caused by, nor did it result from, surface water. (4) The loss was not the result of, or caused by, earthquake, landslide or earth movement. (5) The loss was not caused by inherent vice. (6) The loss was caused by 'settling, cracking, bulging, shrinkage or expansion of foundations, walls, floors, ceilings, roof structures, walks, drives, curbs, fences or retaining walls.' (7) The loss 'was caused by a collapse of the building or any part thereof or by water damage.' (8) Defendant waived the requirement that plaintiffs file a proof of loss within 91 days after the loss. (9) The full and reasonable cost of repair of plaintiffs' dwelling, without deduction for depreciation, is $32,301.00.

After defendant filed its motion urging the court that the answers to issues 1, 2, 3, 4, 5, 7 and 9 be disregarded, the trial court entered judgment sustaining defendant's motion for judgment n.o.v. insofar as it relates to the answer to issue 7 and, after disregarding the answer to issue 7 on the ground that it was without support in the evidence, decreed that plaintiffs take nothing.

It is clear that the jury's finding, in responses to issue 6, that the loss was caused by settling, cracking, etc., brings the loss within exclusion k. Plaintiffs insist that this finding does not prevent recovery because, since the exclusion applicable to loss caused by underground water had been eliminated, and since the jury found that the loss was caused by underground water, exclusion k is inapplicable. As we understand this contention, the argument is simply that, since, as a result of the deletion of the underground water exclusion, the policy covers loss caused by underground water, all losses caused by underground water are covered and the exclusions which are still part of the policy are not applicable to such losses.

We are thus faced with the problem of determining the extent, if any, to which the deletion of a particular exclusion or exclusions, limits the applicability of remaining exclusions. 1

Giving to the deletion of exclusion d(3) its full effect, and reading such effect into the coverage provisions in the manner most advantageous to plaintiff, we arrive at a policy which insures against 'all risks of physical loss, including loss caused by underground or subsurface water, except . . . k. loss caused by settling, cracking, bulging, shrinkage, or expansion of foundations, walls, floors, ceilings, roof structures, walks, drives, curbs, fences, retaining walls or swimming pools.' Even after this plaintiff-oriented rewriting, it is clear that loss caused by settling, etc. is not covered. The cause of the settling is irrelevant, unless exclusion k is also rewritten to limit it to settling, etc., not caused by underground water. We conclude that the deletion of the subsurface water exclusion did not eliminate exclusion k or limit it to settling not caused by underground water.

Plaintiffs next argue that, by the express terms of the paragraph following exclusion k, that exclusion is not applicable here, since exclusion k is made inapplicable to 'ensuing loss and collapse of building, or any part thereof,' or water damage, provided such loss would otherwise be covered under the policy.

Admittedly, the 'ensuing loss' exception to exclusions i, j and k presents some difficulty. At the outset, there are two possible interpretations of the exception. The first interpretation would restrict the modifying phrase, 'ensuing loss' to building collapse, as though the exception were, insofar as here relevant, written in the following form . . Exclusions i, j and k shall not apply to

(1) ensuing loss caused by collapse of building or any part thereof,

(2) water damage.

The second possible interpretation would construe the exception as though it were written in the following form:

. . . Exclusions i, j and k shall not apply to ensuing loss caused by

(1) collapse of building or any part hereof,

(2) water damage.

...

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