Macheca Transport v. Philadelphia Indem.
| Decision Date | 22 September 2006 |
| Docket Number | No. 05-3807.,05-3807. |
| Citation | 463 F.3d 827 |
| Parties | MACHECA TRANSPORT COMPANY, doing business as Gateway Cold Storage; David Macheca; Starlin Macheca, Appellants, v. PHILADELPHIA INDEMNITY INSURANCE COMPANY, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
John F. Horvath, Chicago, IL, for appellants.
Martin J. Buckley, St. Louis, MO, for Appellee.
Before LOKEN, Chief Judge, BOWMAN and BYE, Circuit Judges.
Macheca Transport Company (Macheca) appeals the district court's grant of summary judgment in favor of Philadelphia Indemnity Insurance Company (Philadelphia) asserting the district court addressed only one of two arguments Macheca made seeking coverage under an insurance policy issued by Philadelphia. Macheca also appeals the district court's determination the term "collapse" was used unambiguously in the policy. Lastly, Macheca appeals the district court's grant of a motion to disqualify its counsel. We reverse and remand for further proceedings.
Macheca operates a refrigerated warehouse in St. Louis, Missouri. Macheca purchased an all-risk insurance policy from Philadelphia which provided insurance coverage for damage to the warehouse and its contents subject to certain exclusions and limitations. The relevant portions of the policy provide as follows:
Covered Causes of Loss
Covered Causes of Loss means Risks of Direct Physical Loss unless the "loss" is:
1. Excluded in Section B., Exclusions; or 2. Limited in Section C., Limitations; that follow.
. . .
2. We will not pay for "loss" caused by or resulting from any of the following.
. . .
i. Collapse, except as provided below in the Additional Coverage for Collapse. But if "loss" by any of the Covered Causes of Loss results at the described premises, we will pay for the resulting "loss".
j. Discharge, dispersal, seepage, migration, release or escape of "pollutants". But we will pay for resulting "loss" to Covered Property when the discharge, dispersal, seepage, migration, release or escape of "pollutants" is caused by any of the "specified causes of loss".
. . .
1. We will not pay for "loss" to:
. . .
c. The interior of any "buildings", or to personal property in "buildings", caused by or resulting from rain, snow, sleet, ice, sand or dust whether driven by wind or not, unless:
(1) The "buildings" first sustain damage by a Covered Cause of Loss to their roof or walls through which the rain, snow, sleet, ice, sand or dust enters; or
(2) The "loss" is caused by or results from thawing of snow, sleet or ice on the "buildings".
. . .
We will pay for "loss" caused by or resulting from risks of direct physical "loss" involving collapse of "buildings" or any part of "buildings" caused only by one or more of the following:
1. The "specified causes of loss" or breakage of building glass, all only insured against in this form;
. . .
F. Definitions
. . .
8. "Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.
. . .
11. "Specified Causes of Loss" means the following: fire; lightning; explosion; windstorm or hail; smoke; aircraft or vehicles; riot or civil commotion; vandalism; leakage from fire extinguishing equipment; sinkhole collapse; volcanic action; falling objects; weight of snow, ice or sleet; water damage.
On or about November 18, 2001, pipe which was part of the warehouse refrigeration system ruptured, fell, and leaked ammonia causing damage to the warehouse and its contents. This occurred when part of the pipe's support system detached from the ceiling due to the weight of ice accumulating on the pipe. Macheca notified Philadelphia of the loss on November 26, 2001, and made a claim for coverage under the policy. An engineer retained by Philadelphia inspected the warehouse on January 20, 2002. By letter, dated February 13, 2002, Philadelphia denied Macheca's claim stating a "covered cause of loss had not occurred." The letter also stated a copy of the engineer's report was attached.
On April 8, 2003, Mr. Horvath, counsel for Macheca, wrote to Philadelphia stating Macheca either had not received the engineer's report or had misplaced it, and he asked that another copy be sent. He repeated this request in letters to Philadelphia dated April 8, April 29, June 10, and September 5, 2003, and in a phone conversation on May 23, 2003. On October 21 2003, Mr. Horvath acknowledged receipt of a copy of the engineer's report.
On December 23, 2003, Macheca filed suit against Philadelphia in Missouri state court for breach of insurance contract and vexatious refusal to pay. Philadelphia removed the case to federal court. In federal court, Macheca filed a motion for partial summary judgment on the breach of contract issue. In its memorandum in support of partial summary judgment, Macheca advanced and developed the same two theories for coverage it advanced in a letter sent to Philadelphia on June 10, 2003. Namely, that the loss was covered under (1) the exception to certain exclusions for the "specified causes of loss" for "weight of ice," and (2) the additional coverage Macheca purchased for "collapse." Philadelphia filed a cross motion for summary judgment contending Macheca's loss was not covered by the policy. Philadelphia also filed a motion to disqualify Mr. Horvath as Macheca's counsel under Rule 4-3.7 of the Missouri Supreme Court Rules of Professional Conduct, claiming he would be a necessary witness for Macheca's vexatious refusal to pay claim.1
The district court granted the motion to disqualify Mr. Horvath as Macheca's counsel, concluding his communications with Philadelphia were relevant in determining whether the refusal to pay Macheca's claim was willful and without reasonable cause at the time the refusal was made. The district court also granted Philadelphia's motion for summary judgment and denied Macheca's motion for partial summary judgment, but failed to address Macheca's claim the loss was covered under the exception to certain exclusions for the "specified causes of loss" for "weight of ice." Rather, the district court addressed Philadelphia's contention the policy limited coverage for "loss" to the "interior of any building or to personal property in the building caused by or resulting from . . . ice," (referring to this provision as an exclusion rather than a limitation on coverage). The district court interpreted the limitation in Macheca's favor, concluding the limitation referred to "ice" as an element of the weather, because it was within a list of items solely related to the weather. As such, Philadelphia could not limit coverage under this provision of the policy because the ice at issue was not weather related.
The district court then addressed Macheca's contention the collapse of the ammonia pipe was covered under the "additional coverage—collapse" provision of the policy. Referring to Missouri Court of Appeals' cases which recognize a collapse only when there is an entire "falling or reduction [of a structure] to a flattened form or rubble," the district court determined the term was not ambiguous, and the pipes had not collapsed. See Williams v. State Farm and Cas. Co., 514 S.W.2d 856, 859 (Mo.Ct.App.1974); Eaglestein v. Pac. Nat'l Fire Ins. Co., 377 S.W.2d 540, 544 (Mo.Ct.App.1964).
On September 26, 2005, Macheca filed a motion for reconsideration of the district court's order, noting the court failed to address its primary argument that the loss was covered under the exception to certain exclusions for the "specified causes of loss" for "weight of ice." Macheca called the court's attention to the argument in its original memorandum in support of partial summary judgment, specifically stating "[t]his coverage argument is also a completely separate basis for coverage from the `additional coverage-collapse' argument on which This Court's judgment is based." On September 29, 2005, the district court denied the motion for reconsideration without comment.
Macheca filed a timely appeal of the district court's order granting Philadelphia's motion for summary judgment and the order granting the motion to disqualify Mr. Horvath as Macheca's counsel.
We review the district court's grant of summary judgment de novo, Dayton Dev. Co. v. Gilman Fin. Servs., Inc., 419 F.3d 852, 855 (8th Cir.2005), as well as its interpretation of the terms of an insurance policy. Am. Simmental Ass'n v. Coregis Ins. Co., 282 F.3d 582, 586 (8th Cir.2002).
Macheca argues the district court erroneously granted summary judgment in favor of Philadelphia without considering its argument for coverage under the exception to certain exclusions for the "specified causes of loss" for "weight of ice." Philadelphia contends Macheca only claimed coverage under the "additional coverage-collapse" provision of the policy, and during the summary judgment proceedings "recast" its claim by making a second claim implicating coverage for a loss due to the weight of snow and ice under the "specified causes of loss" provision of the policy. Philadelphia further argues this is an attempt by Macheca "to expand its basis of recovery beyond those previously asserted in its Petition [Complaint] [and] should not be condoned." We disagree.
Macheca clearly made a claim in the district court under the exception to certain exclusions for the "specified causes of loss" for "weight of ice." Macheca's Petition specifically referred to the "Specified Causes of Loss," including coverage for "weight of snow, ice or sleet." Macheca's Petition stated "an ammonia leak occurred in . . . the Subject Building" and "[t]he ammonia pipe collapsed as a result of the weight of ice on the pipe . . . ." The parties do not dispute ammonia is a "pollutant" under the terms of the policy, and the policy covers property loss "when the discharge,...
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