Peters Tp. School Dist. v. Hartford Acc. and Indem. Co.
| Decision Date | 15 December 1987 |
| Docket Number | No. 86-3771,86-3771 |
| Citation | 833 F.2d 32 |
| Parties | , 42 Ed. Law Rep. 1073 PETERS TOWNSHIP SCHOOL DISTRICT, Appellant, v. The HARTFORD ACCIDENT AND INDEMNITY COMPANY. |
| Court | U.S. Court of Appeals — Third Circuit |
Reed B. Day (Argued), John C. Brzustowicz, Peacock, Keller, Yohe, Day & Ecker, Washington, Pa., for appellant.
Richard W. DiBella (Argued), Fredric E. Orlansky, Jones, Gregg, Creehan & Gerace, Pittsburgh, Pa., for appellee.
Before SEITZ and MANSMANN, Circuit Judges and DEBEVOISE, District Judge. *
In this diversity case we are called upon to determine the scope of an exclusionary "earth movement" clause in an "all risk" insurance policy under Pennsylvania law. We conclude that the district court was correct in holding that the exclusion at issue would bar coverage for damage to the school buildings brought about by spontaneous, natural events but not for earth movement brought about by man-made causes such as mine subsidence, the acknowledged cause of the damage to the Middle School.
We further find, however, that the district court erred as a matter of law in finding that the mine area beneath the two schools returned to "the keeping of nature" and thus the damage was caused by a natural phenomenon. We will, therefore, reverse the grant of summary judgment in favor of the insurer and will remand with instructions for the district court to enter partial summary judgment for the school district with respect to the defense of the "earth movement" exclusion in regard to the Middle School. We will vacate the judgment with respect to Elm Grove School, about which a genuine issue regarding causation exists.
Peters Township School District ("the School District") purchased insurance for all its properties from The Hartford Accident and Indemnity Company ("Hartford"). The policy contained the following language of exclusion, which became the crux of this dispute:
This policy does not insure under this form against:
* * *
* * *
D) Loss caused by, resulting from, contributed to or aggravated by any of the following:
1. earth movement, including but not limited to earthquake, landslide, mudflow, earth sinking, earth rising or shifting.
The School District's McMurray Middle School was built over a portion of a coal mine known as Montour No. 4, which is owned and operated by Consolidation Coal Company. In May, 1984, the School District first noticed cracks in the school building which was subsequently closed for student occupancy. The parties agreed that the damage was caused by mine subsidence, or the earth under the school moving in a downward sinking and shifting fashion into the mine voids.
The District's Elm Grove School was also built above the Montour No. 4 mine, and damage to that school occurred in January, 1985. The cause of the damage at the Elm Grove School is disputed.
The School District filed damage claims with Hartford, which were rejected based upon the contention that mine subsidence was an excluded loss under the exclusion noted above. The School District then brought suit in the Court of Common Pleas of Washington County, Pennsylvania. Hartford removed the case to the United States District Court for the Western District of Pennsylvania.
The School District subsequently filed a motion for partial summary judgment on the issue of Hartford's liability and for a separate trial on the issue of damages, pursuant to Fed.R.Civ.P. 42(b). Hartford filed its own motion for summary judgment on the ground of no liability under the policy in regard to either the Middle School or the Elm Grove School. In response to the School District's motion, Hartford contended that an issue of fact existed in regard to the cause of the damage to the Elm Grove School. The district court acknowledged that both parties conceded that the damage to the Middle School was caused by mine subsidence. The court then granted Hartford's motion by finding no liability under the policy, thus foreclosing the issue of the cause of damage to the Elm Grove School, 643 F.Supp. 518. The School District's later motion for reconsideration pursuant to Fed.R.Civ.P. 59 was denied and this appeal followed.
Federal Rule of Civil Procedure 56(c) provides that summary judgment shall be rendered if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
On review of a grant of summary judgment, an appellate court is required to apply the same test the district court should have utilized initially. Inferences to be drawn from the underlying facts contained in the evidential sources must be viewed in the light most favorable to the party opposing the motion. Goodman v. Mead Johnson & Co., 534 F. 566 (3d Cir.1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977). The material facts in this controversy are undisputed. 1 Determination of the proper coverage of an insurance contract when the underlying facts are not in dispute is a question of law. Pacific Indemnity Co. v. Linn, 766 F.2d 754 (3d Cir.1985).
The United States Supreme Court has recently elucidated the varying burdens upon the parties in the context of motions for summary judgment. In Celotex Corporation v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2552-2553, 91 L.Ed.2d 265 (1986), the Court established that Rule 56(c) "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Moreover, there is no requirement that the moving party support its motion with affidavits negating the opponent's claim. The burden on the moving party is to show that there is an absence of evidence to support the nonmoving party's case. Celotex, 106 S.Ct. at 2553. On cross-motions for summary judgment the same burdens would apply.
The Supreme Court explained the materiality requirement for summary judgment in Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). There, the Court held that the materiality determination rests on the substantive law. It is the substantive law's identification of which facts are critical and which irrelevant that governs. The judge, basing his decision on these principles, must then make the threshold inquiry of determining whether there are any factual disputes which could reasonably be resolved in favor of either party. Anderson, 106 S.Ct. 2510-2511. Thus, under the circumstances of this case, we must evaluate the motion for summary judgment using the substantive law of insurance contracts in Pennsylvania to inform our inquiry.
We note as well that in regard to the Rule 59 motion for reconsideration, an order denying a motion for a new trial is not appealable as such. See Greenwood v. Greenwood, 224 F.2d 318 (3d Cir.1955). Rather, we consider on appeal the final judgment in the case and the order denying the new trial is reviewable at that time.
The School District's primary argument is that the district court erred in granting summary judgment for Hartford because the court's dispositive finding--that the subsidence was a natural phenomenon because the mine had returned to "the keeping of nature"--was a factual question, neither briefed nor argued, about which there was a genuine issue of material fact. The School District argues as well that partial summary judgment should have been granted in its favor because the parties agreed that mine subsidence caused the damage to the Middle School.
Hartford counters by asserting that the last date of mining in the portion of the Montour No. 4 mine which was located under the Middle School was the 1930's, and in any event that the mines were worked out in the 1940's, thus returning the mines to a natural condition. Hartford also maintains that any evidence presented to the district court in connection with the School District's motion for reconsideration was inappropriate, as those grounds were not brought to the court's attention in the original proceeding, nor presented in a timely fashion.
The district court accepted the view that " 'earth movement' in the policy ... involved in the case at bar means spontaneous, natural, catastrophic earth movement; and not movements brought about by other causes...." The court concluded that the exclusionary language of the policy was intended to remove from coverage property damage occurring from such natural causes as earthquakes, landslides and mudflows. The court explained though that while the law supported the School District's view of the case, the facts fell short of proving the School District's right to recover.
The court held that "[w]hile we construe the earth movement exclusion as embracing only 'natural' causes, and not other operative causes such as excavation, we can not follow plaintiff's interpretation that all 'things done long ago' by human intervention are 'man made' activities which preclude the applicability of the exclusion." (Emphasis supplied.) The court concluded that the human activity of coal mining under the schools ceased fifty years ago and that, therefore, a stable status quo came into being after the mines were abandoned which rendered the subsidence natural, through spontaneous processes of deterioration and decay. Only natural forces remained operative to effect the subsidence which caused the damage. The district court included the Elm Grove School in its assessment as the insurer's motion for summary judgment alleged that both schools were damaged either by mine subsidence or natural causes, both allegedly excluded...
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