Lower Chesapeake Assoc. v. VALLEY FORGE INS.

• Decision Date: 09 June 2000
• Docket Number: Record No. 991787.
• Citation: 532 S.E.2d 325,260 Va. 77
• Parties: LOWER CHESAPEAKE ASSOCIATES, a Limited Partnership t/a Willoughby Harbour Marina and Little Bay, Ltd. v. VALLEY FORGE INSURANCE COMPANY.
• Court: Virginia Supreme Court

532 S.E.2d 325

260 Va. 77

LOWER CHESAPEAKE ASSOCIATES, a Limited Partnership t/a Willoughby Harbour Marina and Little Bay, Ltd. v. VALLEY FORGE INSURANCE COMPANY.

Record No. 991787.

Supreme Court of Virginia.

June 9, 2000.

Fred D. Smith, Jr. (Young, Haskins, Mann, Gregory & Smith, on briefs), Martinsville, for appellant.

W. Joseph Owen, III (Cowan & Owen, on brief), Richmond, for appellee.

Present: All the Justices.

KEENAN, Justice.

In this appeal, we consider whether the trial court erred in ruling that the owner of a marina was entitled to insurance coverage under a commercial property insurance policy for damage to the marina's docks allegedly caused by a hurricane.

Lower Chesapeake Associates, a limited partnership trading as Willoughby Harbour Marina, and its general partner, Little Bay, Ltd. (collectively, Lower Chesapeake), operate a commercial marina in Norfolk on Willoughby Bay (the marina). The marina consists of four, seven-foot wide floating docks, designated as Docks A, B, C, and D, which provide about 300 boat slips for pleasure craft.

On September 6, 1996, Hurricane Fran struck the coast of North Carolina and affected the Norfolk area with wind, rain, and a storm surge. About five months earlier, Lower Chesapeake had obtained a commercial property insurance policy (the policy) for the marina from Valley Forge Insurance Company (Valley Forge). Lower Chesapeake submitted a damage claim under the policy for "debris removal and repair and replacement of the damaged docks," based on damage allegedly caused by Hurricane Fran. After Valley Forge denied coverage for the claim, Lower Chesapeake brought this breach of contract action seeking, among other things, an award of compensatory damages in the amount of $1.2 million.

At a bench trial, James Ripley, Jr., the marina's dock master, testified that all four docks were damaged during Hurricane Fran as a result of wind blowing against the boats moored at the marina. Ripley stated that some of the lines securing the moored boats broke, and that the boats repeatedly collided with the short finger piers that project from the main docks. He also explained that many of the boat lines were tied to cleats that were affixed to the deck boards. The wind caused boats to draw against the lines and the cleats, causing the deck boards to "pull up."

Ripley testified that the waves during Hurricane Fran were insignificant and did not cause damage to the docks, but he agreed that the moored boats were "pitching" during the hurricane as a result of the wind and the waves. He also acknowledged that he had told an insurance investigator soon after the hurricane that wind caused the wave action that damaged the docks.

Ripley explained that the floating docks were comprised of separate sections linked together by joints constructed of metal brackets and a type of flexible plastic or rubber. He stated that before Hurricane Fran struck, the marina had experienced problems involving broken joints, and that additional joints had broken during a "noreaster" storm in March 1996 (the March storm), prior to the effective date of the policy.

Whenever a joint broke, marina personnel routinely repaired or "patched" it by replacing the flexible joint with a rigid connection between the dock sections. These rigid connections were made by nailing or bolting boards across the top of the deck or onto the stringers, the horizontal support beams under the deck, at the location of a broken joint. Similar repairs were made to the connections between the finger piers and the main docks. Many of these repairs "gave way" during Hurricane Fran.

The marina also had a floating wooden breakwater located between the docks and the entrance to the bay, which served to shelter the docks. Ripley explained that many sections of the breakwater had broken away during the March storm and had not been replaced before Hurricane Fran struck.

Lower Chesapeake had obtained an estimate of $194,000 to make the permanent repairs necessitated by the March storm, but had not made those repairs before Hurricane Fran struck. Ripley described in detail the damage sustained by each section of each dock during Hurricane Fran, referring to numerous photographs that were admitted into evidence. The damage to all four docks included loose and missing deck boards, displaced pilings, overturned utility pedestals, broken deck joints, and missing finger piers. Ripley testified that Dock C "gave way" at its "dogleg" angle when wind pushed a moored boat against the dock. He acknowledged that the marina continued to use all of Docks A and B, and most of Docks C and D after the hurricane, without replacing any part of the docks.

Robert Layton, whose home is adjacent to the marina, testified that he went to the marina during Hurricane Fran to help secure the boats. He saw cleats, planks, and utility pedestals pull from the dock decking, and observed finger piers break loose from the docks after some of the boats hit against the docks. Layton stated that Hurricane Fran did not cause "significant" waves, and that "for a hurricane event, it was a relatively flat occurrence."

Michael Whitt testified that he rented a boat slip on Dock D of the marina from March 1995 until after Hurricane Fran struck. He stated that he had complained to Ripley about the poor condition of the docks and the breakwater every week during the boating season. Whenever the wind exceeded 20 to 30 miles per hour, the cleats to which the boats were tied pulled from the deck boards because the deck wood was rotten.

Whitt testified that there had been numerous "Band-Aid fixes" made to the docks, such as boards being nailed or bolted over rotted dock joints and finger pier connections. He also explained that he frequently nailed boards across the decking near the cleats he was using in order to keep the cleats from "popping up," but that the deck wood was so rotten that these repair attempts were usually unsuccessful. Whitt stated that sections of the breakwater would "break loose during any type of storm that produced a good wind," and that some disconnected sections frequently floated loose in the water. He also testified that Dock C "broke in half" at its "dogleg" angle during Hurricane Fran.

James W. Smith qualified as an expert witness and rendered opinions on the damage to the docks and the estimation of repair and replacement costs. After Hurricane Fran, Smith inspected the marina's damage and estimated the cost of repairing all four docks. He concluded that 80% of Dock C and 88% of Dock D had sustained "considerable damage," and that the least expensive means of repairing these docks was to replace them completely. Smith also testified that about 40% of Dock B and 20% of Dock A were damaged and required replacement.

Smith's total assessment of the replacement cost for all four docks was about $1.3 million. He acknowledged, however, that he could not determine whether some of the damage he observed after Hurricane Fran had been caused by the earlier March storm. He also explained that he had not distinguished between storm damage and damage caused by rot or poor maintenance.

Jesse Herman Brown, Jr., also testified as an expert witness and rendered opinions on the damage to the docks and the estimation of repair and replacement costs. He examined the marina about a month after Hurricane Fran and concluded that the structural framework of Docks C and D had deteriorated to the point that these docks could not be repaired. Brown stated that this deterioration occurred over a period of years, and that the repairs made by marina personnel to the dock joints and finger pier connections were "[v]ery temporary, and dangerous."

Brown estimated a cost of about $991,000 to replace Docks C and D. He explained that he could not state the percentage of this cost attributable to the repair of damage caused by the hurricane, and that most of the damage he observed was caused by general deterioration and wear.

Richard Potts, a forensic civil engineer, qualified as an expert witness on the causes of structural failure and was the only expert to express an opinion about the cause of the storm damage incurred during Hurricane Fran. He examined the marina's docks about three weeks after the hurricane and also consulted a report on the hurricane issued by the National Oceanic and Atmospheric Administration (NOAA). That report indicated that the NOAA station nearest the marina recorded sustained wind speeds of 42 miles per hour, a peak gust of 63 miles per hour, and a storm surge of two feet, six inches.

Potts explained that a storm surge is "the rise above normal elevation of the water due to the storm," and that this is a different phenomenon from waves or tides. Although he had no data establishing the height of the waves at the marina during the hurricane, he concluded that there was a high probability that there was wave action of some degree. Potts also explained that because large sections of the breakwater were missing, the breakwater could not dissipate as much of the wave energy as it was designed to do.

Potts testified that he found "excessive deterioration [and] decay," especially on Docks C and D, which had occurred over a period of between several months and a few years. He stated that the pattern of damage he observed on the docks was not consistent with damage caused by wind alone. In Potts' opinion, the primary cause of the damage was long-term deterioration, combined with the impact of waves and surging water. He noted that the docks failed at the joints, and that due to the existing deterioration, movement caused by even small waves would have been sufficient to inflict the damage.

Potts also testified that the repairs made by marina personnel to the docks' joints and finger pier connections prior to the hurricane were not effective. He stated that the purpose of having flexible joints was to permit the floating dock sections to move...