Sandia Oil Co., Inc. v. Beckton

• Decision Date: 14 November 1989
• Docket Number: No. 86-2387,86-2387
• Citation: 889 F.2d 258
• Parties: SANDIA OIL COMPANY, INC., a New Mexico Corporation; Sunwest Bank of Albuquerque, N.A., Plaintiffs-Appellees, v. Julius BECKTON, Director of the Federal Emergency Management Agency, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 258

889 F.2d 258

SANDIA OIL COMPANY, INC., a New Mexico Corporation; Sunwest Bank of Albuquerque, N.A., Plaintiffs-Appellees, v. Julius BECKTON, Director of the Federal Emergency Management Agency, Defendant-Appellant.

No. 86-2387.

United States Court of Appeals, Tenth Circuit.

Nov. 14, 1989.

Richard K. Willard and John R. Bolton, Asst. Attys. Gen., Civ. Div., Dept. of Justice, Washington, D.C., William L. Lutz, U.S. Atty., Albuquerque, N.M., and Michael Jay Singer, W. Neil Hammerstrom, Jr., and Constance A. Wynn, Attorneys, Civ. Div., Dept. of Justice, Washington, D.C., for defendant-appellant.

Michael Allison of Franchini, Henderson, Wagner & Oliver, Albuquerque, N.M., for plaintiffs-appellees.

Before McKAY, SEYMOUR, and HIGGINBOTHAM, ^* Circuit Judges.

PER CURIAM.

After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed.R.App.P. 34(a); 10th Cir.R. 34.1.9. The cause is therefore ordered submitted without oral argument.

I

Plaintiffs commenced this action pursuant to 42 U.S.C. Sec. 4072 for recovery under a Standard Flood Insurance Policy (the Policy) for flood damage to a concrete surface. The Policy was issued pursuant to the National Flood Insurance Program, which is administered by the Federal Emergency Management Agency (FEMA). The district court granted summary judgment for plaintiffs, awarding recovery under the Policy.

The material facts relative to this case are undisputed and were the subject of a stipulation by the parties. Plaintiff Sandia Oil Company, Inc. (Sandia) owns a gas station, partly insured by the Policy. Sandia's gas station consists of a large concrete foundation which is completely covered by a canopy. The canopy is supported by pillars sunk into a concrete foundation. In addition to covering its concrete foundation, the canopy also covers gasoline pumps and a pay booth. The pay booth has four walls and a roof and constitutes a building as defined in the Policy. The distance between the top of the pay booth and the bottom of the canopy is approximately five feet. The pay booth is not directly attached to the canopy covering.

On June 16 and 17, 1984, a flood, as defined in the Policy, caused damage to the concrete foundation underlying the canopy. Defendant denied liability for the damage, maintaining that only the pay booth was covered by the Policy.

After defendant denied coverage, plaintiffs commenced this action in the district court. In permitting plaintiffs to recover under the Policy, the district court determined that the damaged structure was an extension of or addition to the pay booth and, therefore, covered under the Policy. The district court relied on the following provision in the Policy: "Building: When the insurance under this policy covers a building, such insurance shall include additions and extensions attached thereto [and] permanent fixtures ... forming a part of and pertaining to the services of the building." The district court was aware, however, that the Policy did not cover "those portions of walks, driveways and other paved or poured surfaces outside the formulative walls of the building." Id. The district court entered judgment for plaintiffs in the amount of $11,053.80, plus postjudgment interest and costs.

On appeal defendant first contends that the district court erred in determining that the damage to the concrete foundation of Sandia's canopy is covered by the Policy. Specifically, defendant contends that because coverage under the Policy extends only to Sandia's building, defined as the "walled and roofed structure," the Policy would cover damage only to Sandia's pay booth and not to the concrete area underlying the canopy. The parties stipulated that the damaged concrete area was not a part of the foundation of the pay booth.

The pertinent coverage provisions of the Policy are ambiguous as applied to the facts and circumstances of this case, in view of Sandia's unique facilities and operation. "Where an insurance policy contains ambiguous or equivocal language, [the policy] should be interpreted favorably to the insured." Young v. Fidelity Union Life Insurance Co., 597 F.2d 705, 707 (10th Cir.1979) (citing Unigard Insurance Co. v. Studer, 536 F.2d 1337, 1339 (10th Cir.1976)); accord Atlas Pallet, Inc. v. Gallagher, 725 F.2d 131, 136 (1st Cir.1984) ("insurance contracts are construed liberally in the insured's interest and strictly against the insurer"). "[E]xceptions from coverage are to be strictly construed against the insurer when their application is doubtful." Webb v. Allstate Life Insurance Co., 536 F.2d 336, 340 (10th Cir.1976) (citing Equitable Fire & Marine Insurance Co. v. Allied Steel Construction Co., 421 F.2d 512, 513 (10th Cir.1970)). "Whether a particular structure is covered under the 'additions and extensions' clause of a policy of insurance 'depends upon the language of the policy as applied to the actual situation and use of the property.' " Atlas Pallet, 725 F.2d at 136 (quoting 1 Anderson, Couch on Insurance 2d Sec. 6:17, at 251 (1959) (emphasis added)).

With these principles in mind, we are persuaded that the district court correctly interpreted the Policy in this case. It is clear from the stipulated facts that the canopy and its concrete foundation and the pay booth comprise one whole functionally integrated unit, operation, and structure. We are further convinced that there is a definite and necessary connection, as contemplated by the parties to the Policy, between the canopy and its concrete foundation and the use and purposes of the pay booth, allowing the canopy and its concrete foundation to be considered an integral part, addition, or extension of the pay booth or as a permanent fixture forming a part of and pertaining to the services of the pay booth. Accord id. ("question thus turns on the relative location of the structures, their accessibility, and adaptability to some common end"). Consequently, like the district court, we interpret the Policy as covering the damage to the concrete foundation underlying the canopy.

Defendant has raised a point on appeal concerning the district court's reference throughout its opinion to the damage sustained by plaintiffs. Specifically, defendant argues that the district court mistakenly believed that the canopy itself, rather than its concrete foundation, was damaged by the flood. We disagree with defendant. The district court's opinion demonstrates a precise understanding of the nature of Sandia's premises and the circumstances surrounding the flood and the resulting damage. It appears that the district court referred to the damage to the concrete foundation as damage to the canopy because it viewed the canopy and foundation as a structurally integrated unit. ¹ Indeed, the district court granted summary judgment on the basis of stipulated facts which make it clear that the only damage to Sandia's premises resulting in plaintiffs' claim was the damage to the concrete foundation of the canopy. Consequently, there was no dispute as to what was damaged; and that fact was clear when the district court had before it the independent claims adjuster's recommendation that plaintiffs be paid $11,053.80. The adjuster's report makes it clear that that amount covered the damage to the concrete foundation underlying the canopy. The district court awarded plaintiffs $11,053.80, the exact amount recommended by the adjuster and requested by the plaintiffs for the damage to the concrete foundation.

We affirm the district court's determination of defendant's liability.

II

Defendant next argues that the district court erred in awarding post-judgment interest. At our request, the parties have briefed the effect of the recent Supreme Court case Loeffler v. Frank, 486 U.S. 549, 108 S.Ct. 1965, 100 L.Ed.2d 549 (1988), on the waiver of sovereign immunity for awards of post-judgment interest against FEMA.

Under the traditional "no-interest" rule, the United States is generally immune from awards of interest on claims against it. Library of Congress v. Shaw, 478 U.S. 310, 106 S.Ct. 2957, 2963, 92 L.Ed.2d 250 (1986). Nevertheless, the no-interest rule is inapplicable 1) in a takings case where interest is constitutionally required, 2) where interest awards are specifically provided for in statute or contract or otherwise expressly consented to, and 3) "where the Government has cast off the cloak of sovereignty and assumed the status of a private commercial enterprise." Id. 106 S.Ct. at 2963 & n. 5. The first exception has no application in this case.

Plaintiffs argue that Congress expressly consented to awards of interest against FEMA by allowing suits against the agency under 42 U.S.C. Sec. 4072. Purported waivers of sovereign immunity are strictly construed, especially when dealing with interest awards:

In analyzing whether Congress has waived the immunity of the United States, we must construe waivers strictly in favor of the sovereign, see McMahon v. United States, 342 U.S. 25, 27, 72 S.Ct. 17, 19, 96 L.Ed. 26 (1951), and not enlarge the waiver " 'beyond what the language requires,' " Ruckelshaus v. Sierra Club, 463 U.S. 680, 685-686, 103 S.Ct. 3274, 3278, 77 L.Ed.2d 938 (1983), quoting Eastern Transportation Co. v. United States, 272 U.S. 675, 686, 47 S.Ct. 289, 291, 71 L.Ed. 472 (1927). The no-interest rule provides an added gloss of strictness upon these usual rules.

"[T]here can be no consent by implication or by use of ambiguous language. Nor can an intent on the part of the framers of a statute or contract to permit the recovery of interest suffice where the intent is not translated into affirmative statutory or contractual terms. The consent necessary to waive the traditional immunity must be express, and it must be strictly construed." United States v. N.Y. Rayon Importing Co., 329 U.S. at 659, 67 S.Ct. at 604 [91 L.Ed. 577 1947].

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