Simkins Industries, Inc. v. Lexington Ins. Co.

• Decision Date: 09 May 1979
• Docket Number: No. 735,735
• Citation: 42 Md.App. 396,401 A.2d 181
• Parties: SIMKINS INDUSTRIES, INC. v. LEXINGTON INSURANCE COMPANY et al.
• Court: Court of Special Appeals of Maryland

Page 396

42 Md.App. 396

401 A.2d 181

SIMKINS INDUSTRIES, INC. v. LEXINGTON INSURANCE COMPANY et al.

No. 735.

Court of Special Appeals of Maryland.

May 9, 1979.

David F. Albright and Benjamin R. Goertemiller, Baltimore, with whom were Christopher R. West and Semmes, Bowen & Semmes, Baltimore, on the brief, for appellant

Nevett Steele, Jr., Baltimore, with whom were Wilbur D. Preston, Jr., Ward B. Coe, III, Gerson B. Mehlman and Whiteford, Taylor, Preston, Trimble & Johnston, Baltimore, on the brief, for appellee, Lexington Ins. Co.

Douglas G. Worrall, Baltimore, with whom were William B. Somerville and Smith, Somerville & Case, Baltimore, on the brief, for appellee, Continental Casualty Co.

Richard H. Lerch, Baltimore, with whom were Lerch & Huesman, Baltimore, on the brief, for appellee Hartford Steam Boiler Ins. and Inspection Co.

Argued before MORTON, THOMPSON and LOWE, JJ.

THOMPSON, Judge.

Simkins Industries, Inc. filed suit against Lexington Insurance Company, Continental Casualty Company, and Hartford Steam Boiler Insurance and Inspection Company to recover from those companies certain damages alleged to have been caused by a flood of its properties and allegedly covered by separate insurance policies issued by each of the companies. At the conclusion of the plaintiff's case in the In order to appreciate the arguments it is necessary that we make a brief statement of facts. In June 1972 a tropical storm named Agnes occurred within the Patapsco River basin with precipitation measuring up to fourteen inches. As a result of this rain, the Patapsco River flooded much beyond prior floods. The flood caused substantial damage to Simkins' plants; which consisted of a power plant on the Howard County side of the river containing a boiler, generator, turbine, and other electrical equipment and a large manufacturing complex on the Baltimore County side of the river containing two large papermaking machines and many motors, generators, pulpers, and other related equipment. Prior to Agnes, all of the equipment in the plant was in good condition.

Circuit Court for Baltimore County, the trial judge granted each of the insurance companies' motions for directed verdicts. Simkins appeals alleging that it proved damages which were covered by the policies. We shall affirm as to Lexington and Continental but reverse as to Hartford.

The primary function of the power plant was to generate steam which was used first to run the turbine; it was then piped across the Patapsco River to the manufacturing plant where it was used to operate the papermaking machines and to heat the plant facilities. The steam crossed above the river on a steel truss bridge in a 12 steel pipe. Also crossing the river on the bridge was a 4 steel condensate pipe which returned the steam and condensate to the boiler. On either side of the river, these pipes entered the buildings through holes in the walls.

The plant was shut down and all electric power extinguished around midnight, June 21 and 22, 1972, the night of the flood. David Garrity, the plant manager, and several other workmen remained on the upper levels of the plant throughout the night. Armed with flashlights, they periodically inspected the water height and checked to ensure that no fires broke out. During the period following 1:00 a. m., Garrity was stationed at an upper level door on the river side of the manufacturing plant from which he could observe the river directly outside and the pipe bridge about 100 feet away.

Garrity saw two large trees bearing down on the bridge. By this time, the river level had risen to the bottom of the pipes. When these trees hit the bridge and the pipes he saw the building wall near him, through which the pipes entered the building, start to collapse, and he quickly retreated into the building. Fifteen minutes later, he returned to his observation post and observed the destruction. The pipes and conduit crossing the river had disappeared along with the bridge. The wall through which the steel pipes had entered the manufacturing plant had been completely torn away. In addition, the river side wall of the power plant had been ripped away. Flooding at the plant site was so common that a "flood drill" had been organized and had been utilized on a number of occasions. The plant had suffered flood damage prior to Agnes and was shut down for a six-week period in 1975 as a result of another flood associated with a hurricane. The evidence is clear, however, that the flood caused by Agnes was the worst to hit that area since records have been kept.

There were in effect at the time of the flood three separate policies of insurance issued by Lexington, Continental, and Hartford. As we have stated, the trial judge granted the motions of Lexington and Continental for directed verdicts on the grounds that the policies did not insure against the loss sustained. The court directed a verdict in favor of Hartford on the ground that the proof was insufficient to show that Simkins' losses were "solely due to" the peril insured against.

I Lexington and Continental

Lexington and Continental issued named peril policies, as opposed to all risk policies, to the appellant. On the first page ¹ it was provided:

"INSURANCE IS PROVIDED AGAINST ONLY THOSE PERILS . . . INDICATED BELOW BY A PREMIUM CHARGE AND AGAINST OTHER PERILS . . . ONLY WHEN ENDORSED HEREON OR ADDED HERETO."

Below that language, the following table appears:

PERILS(s)

ANNUAL PAYMENT Insured Against

PREPAID TERM DUE UNDER & Coverage(s)

PREMIUM DUE PREM. PAY. Provided (Insert

"AMOUNT RATE AT INCEPTION PLAN Name of Each)

$2,500,000.00 .225 $41,978.00 $ Fire & Lightning

$Incl. $ Extended Coverage

$Incl. $ VMM

$Incl. $ Sprinkler Leakage

Total(s) $41,978.00 $ "

All of the covered perils are enumerated in Section II of the policy. They are:

1) Fire; Lightning; 3) Wind or Hail; 4) Sprinkler Leakage; 5) Explosion; 6) Riot, Civil Commotion, Vandalism, Malicious Mischief; 7) Acts of the civil authority to prevent the spread of fire; 8) Impact of vehicles; 9) Impact of aircraft; 10) Sonic Boom; 11) Smoke; 12) Molten Materials.

Section I contains exclusions as follows:

"This Policy does not cover loss or damage:

Resulting from flood or the release of water from natural or man-made bodies of water, whether or not caused by or contributed to by an insured peril. However, liability is specifically assumed for loss or damage by fire, sprinkler leakage, explosion, or accident, all as defined and limited elsewhere in this Policy, resulting from flood or the release of water from natural or man-made bodies of water. For the purpose of this Policy, flood includes but is not limited to tidal wave, wave wash, high water, or overflow, surface or rising water, all whether or not driven by wind."

To support its contention that the policies provided It is settled in Maryland law that absent ambiguity the construction of an insurance contract is a matter of law for the court. Government Employees Insurance Company v. DeJames, 256 Md. 717, 720, 261 A.2d 747 (1970). See also, Winterwerp v. Allstate Insurance Co., 277 Md. 714, 717, 357 A.2d 350 (1976) and Keyworth v. Industrial Sales, 241 Md. 453, 456, 217 A.2d 253 (1966). The standard for interpretation in Maryland is somewhat different from that of many other states. The Court of Appeals set it out in Government Employees Insurance Company v. DeJames, supra :

coverage for the losses incurred during the flood here in question, appellant relies upon a weak reed, that is, the language of the exclusionary clause quoted above which, after excluding loss or damage from flood, said, "liability is specifically assumed for loss or damage by fire, sprinkler leakage, explosion, or accident, all as defined and limited elsewhere in this Policy, resulting from flood. . . ."

"It is well settled that in interpreting insurance contracts, words are to be given their customary and normal meaning. State Farm Mut. Auto Ins. Co. v. Treas, 254 Md. 615, 255 A.2d 296 (1969); American Home Assurance Co. v. Erie Ins. Exchange, 252 Md. 116, 248 A.2d 887 (1969); Offutt v. Liberty Mut. Ins. Co., 251 Md. 262, 247 A.2d 272 (1968); Harleysville Mut. Cas. Co. v. Harris & Brooks, Inc., 248 Md. 148, 151, 235 A.2d 556 (1967), and cases there cited. Absent ambiguity the construction of the contract remains within the province of the court and Maryland has not adopted the rule, followed in many jurisdictions, that an insurance policy is to be most strongly construed against the insurer, American Cas. Co. of Reading Pennsylvania v. Aetna Cas. & Surety Co., 251 Md. 677, 248 A.2d 487 (1968); Mateer v. Reliance Ins. Co., 247 Md. 643, 233 A.2d 797 (1967); Ebert v. Millers Mut. Fire Ins. Co., 220 Md. 602, 155 A.2d 484 (1959). If the language of insurance contract is ambiguous, however, construction is for the jury, Ebert v. Millers Mut. Fire Ins. Co., supra, 220 Md. at 610, 155 A.2d 484; Eagle Star & British Dominions Ins. Co. v We see no ambiguity in the present case within the meaning of the rule that an ambiguous contract must be submitted to the jury for determination.

Fleischman, 175 Md. 433, 2 A.2d 424 (1938); 22 Appleman, Insurance Law and Practice § 12853 (1947) at 7, and the ambiguity is to be resolved against the company which prepared the policy and in favor of the insured, American Cas. Co. of Reading, Pennsylvania v. Aetna Cas. & Surety Co., supra, 251 Md. (677) at 684, 248 A.2d 487; Allstate Ins. Co. v. Humphrey, 246 Md. 492, 496, 229 A.2d 70 (1967)." 256 Md. at 720, 261 A.2d at 749.

Appellant argues that the policy does not define the word accident and, therefore, the word should be given its customary and normal meaning, citing Harleysville Mutual Casualty Co. v. Harris & Brooks, Inc., 248 Md. 148, 235 A.2d 556 (1967). In that case, the Court of Appeals quoted the definition of accident found in Webster's Twentieth Century Dictionary (1950), as follows:

"A happening; an event that takes...