Turner v. State Farm Fire and Cas. Companies

• Decision Date: 12 March 1993
• Citation: 614 So.2d 1029
• Parties: Gary Lee TURNER and Linda C. Turner v. STATE FARM FIRE AND CASUALTY COMPANIES. 1911154.
• Court: Alabama Supreme Court

Page 1029

614 So.2d 1029

Gary Lee TURNER and Linda C. Turner v. STATE FARM FIRE AND CASUALTY COMPANIES.

1911154.

Supreme Court of Alabama.

March 12, 1993.

Henry H. Self, Jr., and J. Barry Mansell of Self & Self, Florence, for appellants.

Larry B. Moore and Albert J. Trousdale II of Almon, McAlister, Ashe, Baccus & Tanner, Tuscumbia, for appellee.

HORNSBY, Chief Justice.

The plaintiffs, Gary Lee Turner and Linda Turner (husband and wife), appeal from a summary judgment in favor of the defendant, State Farm Fire and Casualty Companies, in an action alleging breach of contract and bad faith refusal to pay insurance proceeds. We affirm in part; reverse in part; and remand.

In November 1988 the Turners purchased a partially constructed house. They insured against casualty to the house during construction by purchasing a State Farm builder's risk insurance policy that would convert to a homeowner's policy upon completion of construction. On February 3, 1990, while the Turners' house was under construction, a basement wall collapsed. The Turners filed a claim under their builder's risk insurance policy, but State Farm denied coverage, because, it said, the Turners' policy excluded both losses to a basement wall and any collapse caused by water pressure, and it said either exclusion would apply in this case.

On December 7, 1990, the Turners filed this action against State Farm, alleging breach of contract and bad faith refusal to pay insurance proceeds. On February 19, 1992, the trial court entered a summary judgment for State Farm on both counts. The Turners appeal.

"In reviewing the disposition of a motion for summary judgment, we utilize the same standard as the trial court in determining whether the evidence before [it] made out a genuine issue of material fact" and whether the movant was "entitled to a judgment as a matter of law." Bussey v. John Deere Co., 531 So.2d 860, 862 (Ala.1988) (citing Chiniche v. Smith, 374 So.2d 872 (Ala.1979)); Rule 56(c), Ala.R.Civ.P. When the movant has carried the burden of making a prima facie showing, by admissible evidence, that there is no genuine issue of material fact and that the movant is entitled to a judgment as a matter of law, the party opposing the summary judgment motion has the burden of presenting substantial evidence creating a genuine issue of material fact. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989); Ala.Code 1975, § 12-21-12. "Substantial evidence" is "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989); Ogle v. Long, 551 So.2d 914, 915 (Ala.1989). Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant, resolving all reasonable doubts against the movant. Hanners v. Balfour Guthrie, Inc., 564 So.2d 412, 413 (Ala.1990); Wilson v. Brown, 496 So.2d 756, 758 (Ala.1986); Harrell v. Reynolds Metals Co., 495 So.2d 1381, 1383 (Ala.1986).

I.

The Turners argue that the summary judgment was improper as to their breach of contract claim for two reasons: (1) the policy, they say, did not exclude loss to a basement wall from coverage, and (2) they say they presented substantial evidence creating a genuine issue of material fact as to whether water pressure caused the basement wall to collapse. This Court has held that an insurance company has the right to limit its liability and write a policy with narrow coverage but that, when doubt exists as to whether an insurance policy provides coverage, the language used by the insurer must be construed liberally for the benefit of the insured and strictly against the insurance company. See Garrett v. Alfa Mutual Ins. Co., 584 So.2d 1327, 1330 (Ala.1991); Guaranty Nat'l Ins. Co. v. Marshall County Bd. of Educ., 540 So.2d 745, 748 (Ala.1989).

The builder's risk insurance policy that the Turners purchased from State Farm contained the following provision:

"12. Collapse. We insure for direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following:

"....

"f. use of defective material or methods in construction, remodeling, or renovation, if the collapse occurs during the course of construction, remodeling, or renovation.

"Loss to an awning, fence, patio, pavement, swimming pool, underground pipe, flue, drain, cesspool, septic tank, foundation, retaining wall, bulkhead, pier, wharf, or dock is not included under items b., c., d., e., and f. unless the loss is a direct result of the collapse of a building."

(Emphasis added.)

The parties disagree on whether the term "foundation" in the above-quoted section of the policy encompassed basement walls so that loss to a basement wall would be excluded from coverage. The Turners argue that the term "foundation" would not encompass their basement walls because, they say, the walls were free standing when constructed and formed the interior walls of the first floor of the house. Mr. Turner filled dirt around the walls to make a basement sometime after their construction. The Turners contend that they understood the term "foundation" to mean the three-by-three foot piece of concrete under the basement wall.

In contrast, State Farm argues that the "foundation" of a house includes the basement walls, because, it says, the term "foundation" means "the whole masonry substructure of a building." State Farm cites this Court to definitions that support its contention in Webster's Ninth New Collegiate Dictionary 487 (Merriam-Webster, Inc. 1989) and the United States Department of Agriculture's Handbook on Woodframe House Construction. However, this Court has held that, in construing the language of an insurance policy, the language should be given the meaning that a person of ordinary intelligence would reasonably think the language had. National Union Fire Ins. Co. v. City of Leeds, 530 So.2d 205, 207 (Ala.1988).

Although State Farm's assertion that the term "foundation" encompasses the entire masonry substructure of a building may coincide with one of the definitions of "foundation" provided in the dictionary cited, this Court is not convinced that State Farm's definition is the meaning that a person of ordinary intelligence would reasonably give to the term "foundation." Instead, a person of ordinary intelligence could reasonably conclude, as the Turners say they did, that the term "foundation" refers only to the piece of concrete at the base of the wall; this conclusion is the only one possible when a house has no basement. Nothing in the Turners' policy defined the term "foundation" or indicated that it would or would not encompass a basement wall. Because it is this Court's policy to construe an insurance company's language most strictly against the company when doubt exists as to the meaning of that language, we conclude that the term "foundation" in the exclusionary provision of the Turners' builder's risk insurance policy was ambiguous.

When "ambiguity exists in the language of an exclusion, the exclusion will be construed narrowly so as to limit the exclusion to the narrowest application reasonable under the wording." Guaranty Nat'l, 540 So.2d at 748; see also Amerisure Ins. Companies v. Allstate Ins. Co., 582 So.2d 1100, 1102 (Ala.1991). Applying this principle, we conclude that the basement wall should not be excluded from coverage under the term "foundation" in the exclusionary section of the Turners' policy.

We therefore turn to the Turners' second contention as to why the summary judgment for State Farm was improper. Apparently, the Turners do not dispute the fact that, if water pressure caused the basement wall to collapse, their policy would not cover the damage. However, they argue that they presented substantial evidence creating a genuine issue of material fact as to whether water pressure caused the basement wall to collapse. We agree.

Although State Farm's expert, structural engineer James A. Durham, testified by affidavit that water pressure was one of the causes for the collapse of the basement wall, Durham did not inspect the Turners' house until five...