Naabani Twin Stars, LLC v. Travelers Cos.

• Decision Date: 22 October 2020
• Docket Number: No. CIV 19-00197 RB/JHR,CIV 19-00197 RB/JHR
• Citation: 497 F.Supp.3d 1011
• Court: U.S. District Court — District of New Mexico
• Parties: NAABANI TWIN STARS, LLC and Twin Stars, Ltd., Plaintiffs, v. TRAVELERS COMPANIES, INC., and St. Paul Fire & Marine Insurance Company, Defendant.

497 F.Supp.3d 1011

NAABANI TWIN STARS, LLC and Twin Stars, Ltd., Plaintiffs,

v.TRAVELERS COMPANIES, INC., and St. Paul Fire & Marine Insurance Company, Defendant.

No. CIV 19-00197 RB/JHR

United States District Court, D. New Mexico.

Filed October 22, 2020

Michael L. Carrico, William R. Keleher, Smidt, Reist & Keleher, P.C., Albuquerque, NM, for Plaintiffs.

Greg S. Hearing, John M. Palmeri, Gordon Rees Scully Mansukhani, Denver, CO, Kenneth Ferguson, Gordon & Rees, LLP, Austin, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

ROBERT C. BRACK, SENIOR U.S. DISTRICT JUDGE

On July 17, 2016, a water pipe broke under the parking lot adjacent to a building owned by Plaintiffs Naabani Twin Stars, LLC and Twin Stars, Ltd. The water caused the soil to collapse, which in turn caused damage to Plaintiffs’ building. Plaintiffs, who were insured under a policy with Defendant St. Paul Fire & Marine Insurance Company, filed a claim. Defendant denied coverage.

Plaintiffs claim the damage suffered amounted to a "collapse" as defined by the insurance policy. Defendant contends that the losses fall under the policy's exclusion for "Earth movement." Plaintiffs filed a declaratory judgment action in state court pursuant to N.M. Stat. Ann. § 44-6-4. Defendant removed the case to this Court and now moves for summary judgment. For the reasons discussed below, the Court will grant summary judgment in favor of Defendant and dismiss Plaintiffs’ claims.

I. Legal Standards

A. Standard for Motions for Summary Judgment

"Summary judgment is proper if, viewing the evidence in the light most favorable to the non-moving party, there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Halley v. Huckaby , 902 F.3d 1136, 1143 (10th Cir. 2018), cert. denied , ––– U.S. ––––, 139 S. Ct. 1347, 203 L.Ed.2d 570 (2019) (citing McCoy v. Meyers , 887 F.3d 1034, 1044 (10th Cir. 2018) ). A fact is "material" if it could influence the determination of the suit. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute over a material fact is "genuine" if a reasonable trier of fact could return a verdict for either party. Id. "The movant bears the initial burden of ‘show[ing] that there is an absence of evidence to support the nonmoving party's case.’ " Tanner v. San Juan Cty. Sheriff's Office , 864 F. Supp. 2d 1090, 1106 (D.N.M. 2012) (quoting Bacchus Indus., Inc. v. Arvin Indus., Inc. , 939 F.2d 887, 891 (10th Cir. 1991) ) (citing Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). "Once the movant meets this burden, rule 56 requires the non-moving party to designate specific facts showing that there is a genuine issue for trial." Id. (citing Celotex , 477 U.S. at 324, 106 S.Ct. 2548 ; Anderson , 477 U.S. at 256, 106 S.Ct. 2505 ). A party cannot "avoid summary judgment by repeating conclusory opinions, allegations unsupported by specific facts, or speculation." Id. (quotation and citation omitted). Instead, the non-moving party must come forward with "sufficient evidence on which the factfinder could reasonably find" in their favor. Id. (citations omitted). Evidence that is "merely colorable," Anderson , 477 U.S. at 249, 106 S.Ct. 2505, or consists only of "[u]nsubstantiated allegations[,]" McCoy , 887 F.3d at 1044, is insufficient.

B. Relevant Local Rules

Pursuant to Local Rule 56, the party moving for summary judgment "must set out a concise statement of all of the material facts as to which the movant contends no genuine issue exists." D.N.M. LR-Civ. 56.1(b). The movant must number the facts "and must refer with particularity to those portions of the record upon which the movant relies." Id. In return, the non-moving party must also provide "a concise statement of the material facts ... as to which the non-movant contends a genuine issue does exist." Id. The non-movant must number each fact in dispute, "must refer with particularity to those portions of the record upon which the non-movant relies, and must state the number of the movant's fact that is disputed." Id. "All material facts set forth in the Memorandum will be deemed undisputed unless specifically controverted." Id.

II. Statement of Facts¹

A. Undisputed Facts

Naabani Twin Stars, LLC is the owner of property located at 100 Iowa, Bloomfield, NM 87413. (Doc. 41-2 at 2.) The property was built in 2006 and occupied in May 2007. (Doc. 38-B at 4.) On July 17, 2016, an underground water line ruptured on the property. (Doc. 1-1 at 3.) Plaintiffs state that the ruptured water line caused a collapse under the parking lot, which in turn caused land beneath the building to change positions and damage the building. (Id. ) On July 18, 2016, Plaintiffs hired Geomat, Inc., a geotechnical consultant, to inspect their building. (Doc. 41-5 at 2.) Geomat found that the "excessive movement of the southwestern portion of the building ... [was] likely due to additional compression of the supporting soils due to water infiltration from the leaking waterline." (Doc. 41-1 at 2.) Plaintiffs hired a second consultant, Robert Prindle, who later agreed with Geomat's conclusions stating, "Geomat correctly concluded that a material change in site conditions had occurred as a direct result of the rupture of the water pipe in the south parking lot, and that those changes directly affected the settlement of the south portion of the building." (Doc. 38-C at 5.) Mr. Prindle also specified that "the effects of settling caused by the water pipe rupture extend ... approximately 35 to 45 feet northward from the south wall of the office portion of the building[,] ... approximately 35 feet northward from the south wall of the reception area in the parts portion of the building[,] ... and approximately 20 feet northward from the south wall of the shop portion of the building." (Id. at 8.) The damage to the building included: cracks in the floor, buckling of the building's exterior, breaking of sheetrock, and the inability to close and open doors. (Doc. 41-5 at 2.) This damage put stress on the fire suppression water line, causing the line to be in danger of breaking. Because of the stress put on the fire suppression water line, Plaintiffs turned off the fire suppression system. (Id. at 3.) Because the fire suppression system was turned off, the Fire Marshall required that the gas line be turned off as well. (Id. ) This kept the building from being heated. (Id. ) After repairs were made, the gas and fire suppression lines were reconnected. These repairs allowed Plaintiffs to continue using the building. (Id. )

As noted above, Plaintiffs filed a claim with Defendant under the insurance policy. (Doc. 38-F at 2.) Ultimately, Defendant denied coverage and explained its reasoning in a letter dated September 29, 2016. (Id. ) Defendant's letter advised Plaintiffs that:

In the reporting of the loss, it was reported that the damage was extensive to the point that there was fear of the possible collapse of the structure. It was also reported that the settlement was a result of the parking lot plumbing leak....

... The plumbing leak in the parking lot was located approximately sixty feet from the nearest wall of the building. Evidence reviewed finds that the building settlement is as a result of subsurface movement.

As noted in the policy language cited in the section above, our inspection found the building was not in a state of collapse as defined under the policy and therefore there is no coverage under the peril of collapse.

Furthermore the policy excludes the damage found to the building under several exclusions, including, but not limited to earth movement and settling. Other exclusions may apply as well.

(Doc. 38-F 3–4.) Plaintiffs dispute Defendant's denial of coverage and claim they are covered under the policy's "collapse" section, but Defendant maintains that coverage is barred by the "Earth movement" exclusion.²

B. Policy Provisions

The Court will detail the pertinent sections of the policy below.

What This Agreement Covers

The description of property covered, the limit of coverage, and other terms and conditions are shown in the Coverage Summary.

(Doc. 38-A at 3.)

Covered Causes Of Loss

We'll protect covered property against risks of direct physical loss or damage except as indicated in the Exclusions - Losses We Won't Cover section.

(Id. )

Additional Coverages

All of the following additional coverages are included when either building or business personal property coverage has been purchased and is shown in the Coverage Summary.³ Unless otherwise indicated, these additional coverages are not in addition to the limits of coverage for building or business personal property shown in the Coverage Summary.

(Id. at 5.)

Collapse

We'll cover direct physical loss of or damage to covered property, except that described in the Property with limited collapse coverage section, caused by collapse when the collapse is caused by any of the following:

• Fire, smoke, lightning, wind, hail, explosion, vehicles, aircraft, vandalism, malicious mischief, civil disturbance, riot, sprinkler leakage, sinkhole collapse, or volcanic action.

• Building glass breakage, falling objects, weight of ice, weight of snow, or weight of sleet, or water damage.

• Decay that's hidden from view, unless the presence of such decay is known or should have been known to an insured prior to collapse.

• Insect or vermin damage that's hidden from view, unless the presence of such damage is known or should have been known to an insured prior to collapse.

• Weight of people, weight of business personal property, or weight of other personal property.

• Weight of rain that collects on a roof.

• Use of defective material or methods in construction, remodeling, or renovation, if the collapse occurs before such work is completed.

(Id. at 5–6.)

Collapse means an abrupt falling down or caving in of a building or structure, or any part of a building or structure, with the result that the building,

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