Murray v. State Farm Fire and Cas. Co.

• Decision Date: 21 July 1998
• Docket Number: No. 24759, No. 24760.
• Court: West Virginia Supreme Court
• Parties: Robert L. MURRAY and Janet L. Murray, his wife; Bernie W. Rees and Julie A. Rees, his wife; and Robert J. Withrow, Plaintiffs below, Appellees, v. STATE FARM FIRE AND CASUALTY COMPANY, a Foreign Corporation; Allstate Insurance Company, a Foreign Corporation, Defendants below, Appellants, and Robert J. Harris, Defendant below, Appellee.

509 S.E.2d 1

203 W.Va. 477

Robert L. MURRAY and Janet L. Murray, his wife; Bernie W. Rees and Julie A. Rees, his wife; and Robert J. Withrow, Plaintiffs below, Appellees, v. STATE FARM FIRE AND CASUALTY COMPANY, a Foreign Corporation; Allstate Insurance Company, a Foreign Corporation, Defendants below, Appellants, and Robert J. Harris, Defendant below, Appellee.

Nos. 24759, 24760.

Supreme Court of Appeals of West Virginia.

Submitted April 29, 1998.

Decided July 21, 1998.

David P. Cleek, Esq., Lou Ann S. Cassell, Esq., McQueen, Harmon, Potter & Cleek, L.C., Charleston, West Virginia, Attorneys for Appellant State Farm.

Brent K. Kesner, Esq., Tanya M. Kesner, Esq., Linda Gay, Esq., Kesner, Kesner & Bramble, Charleston, West Virginia, Attorneys for Appellant Allstate.

Ted M. Kanner, Esq., The Ted Kanner Law Office, Charleston, West Virginia, J. Nicholas Barth, Esq., Barth, Thompson & George, Charleston, West Virginia, Attorneys for Appellees Murray, Rees and Withrow.

Larry L. Skeen, Esq., Ripley, West Virginia, Attorney for Appellee Harris. STARCHER, Justice:

The appellants and defendants below, State Farm Fire and Casualty Company ("State Farm") and Allstate Insurance Company ("Allstate"), appeal an order of the Circuit Court of Jackson County granting summary judgment to several homeowners in a dispute concerning policy exclusions in two homeowners' insurance policies. The policyholders' homes were damaged by rocks falling from the highwall of a 40-year old abandoned rock quarry situated next to the homes. The policyholders' insurance carriers denied coverage, claiming that the applicable insurance policies excluded losses caused by "landslides" and "erosion." The circuit court concluded that the policies did not exclude from coverage losses caused by "rockfalls" and "weathering," and that the plaintiffs' losses were the result of those events. The circuit court held that the plaintiffs were entitled to coverage under the policies.

After reviewing the record, we conclude that questions of material fact exist concerning whether coverage exists under both policies. We reverse the circuit court's order granting summary judgment and remand the case for trial.

I. Factual Background

The plaintiff-appellees in this case—Robert and Janet Murray, Bernie and Julie Rees, and Robert Withrow—are the owners of three adjacent properties on Spring Street in Ripley, West Virginia. The plaintiffs' homes were constructed on their properties in the 1970's. Immediately adjacent to the rear of the three houses is a man-made highwall standing nearly 50 feet high. This vertical highwall is the result of quarrying operations conducted in the 1950's. The highwall is allegedly located on property owned by defendant-appellee Robert B. Harris. On February 22, 1994, several large boulders and rocks fell off the highwall and onto the houses owned by plaintiffs Murray and Withrow, causing extensive damage. The house owned by plaintiffs Mr. and Mrs. Rees was not damaged by rocks. However, firemen compelled all three families to leave their homes because of the possibility that additional rocks could fall, and turned off all electricity and water. An engineer who examined the highwall several days later concluded that further rockfalls would "continue to occur, some with potentially disastrous results."¹ None of the three families has lived in their homes since February 22, 1994.²

Several engineers and geologists examined the property and highwall in the following weeks. Each gave, to some extent, an opinion that what occurred on Spring Street was primarily a "rockfall" and not a "landslide," because no "sliding" was involved: a layer of shale supporting a layer of sandstone "weathered," removing support for the sandstone, and sandstone blocks broke loose and dropped onto the plaintiffs' homes.³ One expert said that he thought of a rockfall as "almost a vertical displacement free-falling through the air off of a cliff, a highwall, an escarpment." However, several of the experts conceded that rock falls are considered to be a type of landslide, and are accepted as a sub-category of a landslide; and they further agreed that erosion contributed to the moving of the rocks in the instant case.

Furthermore, there is evidence in the record that negligent construction of the highwall behind the plaintiffs' residences, namely the cutting of the rock face at a near vertical angle, contributed to the rockfall. Expert George A. Hall indicated that "the design of the cut-slope on Spring Street did not meet standards which you would reasonably and normally expect for civil engineering purposes of designing cut-slopes." He also said that had proper civil engineering techniques been used when the highwall was created, the danger of a fall like the one that occurred would not be present.

Plaintiffs Murray and Rees filed claims for the losses to their homes with their homeowner's insurance carrier, defendant State Farm. Plaintiff Withrow filed a similar claim with his insurance carrier, defendant Allstate. Insurance agents notified the plaintiffs that State Farm and Allstate would not cover the losses, citing to numerous policy provisions and exclusions, including an exclusion for losses caused by landslide or erosion.

The plaintiffs then filed the instant lawsuit against defendants Allstate and State Farm alleging breach of contract and bad faith. The plaintiffs also sued defendant Harris for nuisance, trespass, and failing to protect the plaintiffs' property from the "dangerous, artificial manmade condition existing on the defendant's property[.]" Defendant State Farm filed a counterclaim against the plaintiffs seeking a declaratory judgment regarding State Farm's obligations under its policies.

The plaintiffs and defendants State Farm and Allstate filed motions for summary judgment concerning coverage under the disputed insurance policies. Through a letter ruling on January 3, 1997 and a subsequent order on March 17, 1997, the circuit court granted summary judgment to the plaintiffs. The circuit court held that the rockfall "is a loss covered under the plaintiffs' respective insurance policies." The court also held that whether the plaintiffs' damages were caused by a rockfall, and the extent of those damages, were issues to be determined by a jury.

State Farm and Allstate now appeal the circuit court's order.

II. Standard of Review

This appeal arises from the circuit court's granting of partial summary judgment to the plaintiff. Our review is de novo. Syllabus Point 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994). In reviewing summary judgment, this Court will apply the same test that the circuit court should have used initially, and must determine whether "it is clear that there is no genuine issue of fact to be tried and inquiry concerning the facts is not desirable to clarify the application of the law." Syllabus Point 3, Aetna Casualty & Surety Co. v. Federal Insurance Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963).

In this case we are primarily asked to review the circuit court's interpretation of an insurance contract. In Payne v. Weston, 195 W.Va. 502, 506-07, 466 S.E.2d 161, 165-66 (1995), we discussed the applicable standard of review in such cases, stating that "[t]he interpretation of an insurance contract, including the question of whether the contract is ambiguous, is a legal determination which, like the court's summary judgment, is reviewed de novo on appeal." "Determination of the proper coverage of an insurance contract when the facts are not in dispute is a question of law." Pacific Indemnity Co. v. Linn, 766 F.2d 754, 760 (3d Cir.1985).

When a court interprets an insurance policy, the "[l]anguage in an insurance policy should be given its plain, ordinary meaning." Syllabus Point 1, Soliva v. Shand, Morahan & Co., Inc., 176 W.Va. 430, 345 S.E.2d 33 (1986). "Where the provisions of an insurance policy contract are clear and unambiguous they are not subject to judicial construction or interpretation, but full effect will be given to the plain meaning intended." Syllabus, Keffer v. Prudential Ins. Co. of America, 153 W.Va. 813, 172 S.E.2d 714 (1970).

However, "[w]henever the language of an insurance policy provision is reasonably susceptible of two different meanings or is of such doubtful meaning that reasonable minds might be uncertain or disagree as to its meaning, it is ambiguous." Syllabus Point 1, Prete v. Merchants Property Ins. Co. of Indiana, 159 W.Va. 508, 223 S.E.2d 441 (1976). "It is well settled law in West Virginia that ambiguous terms in insurance contracts are to be strictly construed against the insurance company and in favor of the insured." Syllabus Point 4, National Mut. Ins. Co. v. McMahon & Sons, Inc., 177 W.Va. 734, 356 S.E.2d 488 (1987).

With these principles in mind, we undertake a plenary review of the disputed policy language to determine whether the plaintiffs' homeowners' policies from defendants Allstate and State Farm provide coverage in the factual situation presented.

III. Discussion

Defendants Allstate and State Farm provided the plaintiffs with "all-risk" homeowner's insurance policies.⁴ Under an all-risk policy, recovery is allowed for all losses arising from any fortuitous cause, unless the policy contains an express provision excluding the loss from coverage. Essex House v. St. Paul Fire & Marine Ins. Co., 404 F.Supp. 978, 987 (S.D.Ohio 1975). See generally, J. Draper, Coverage Under All-Risk Insurance, 30 A.L.R.5th 170 (1995).

Both Allstate and State Farm contend that the losses suffered by the plaintiffs are barred from coverage by express policy provisions excluding losses resulting from "earth movement, including but not limited to ... landslide ... [or] erosion[.]"

The defendants challenge the circuit court's order on four grounds. First, both defendants challenge the circuit court's summary judgment order finding that coverage existed under the...