905 F.3d 661
D.C. Cir.2018Background
- Owners Vasilli Katopothis and Francesca Dahlgren (D.C. residents) own a furnished second home in Rehoboth Beach, DE; they left it unattended for 10 days in Feb. 2013 and did not shut off the main water supply.
- A pressurized hot-water pipe joint separated upstairs, flooding the main level; Dahlgrens hired Gale Force for remediation and filed an insurance claim with Windsor-Mount Joy Mutual (Windsor‑Mount).
- Windsor‑Mount denied the claim based on endorsement ML‑508D (an "Additional Exclusions for Unoccupied Residences" endorsement) which disclaims coverage for plumbing discharge/leakage when a residence is unoccupied >72 hours unless the insured maintains heat and shuts off incoming water (or shuts off water and drains systems).
- Dahlgrens sued Windsor‑Mount for breach of contract and added claims against Gale Force (breach, negligence, consumer fraud). Windsor‑Mount removed to federal court and impleaded Gale Force.
- The district court granted summary judgment to Windsor‑Mount (applying ML‑508D), concluded it lacked personal jurisdiction over Gale Force, and transferred the Gale Force claims to Delaware; Dahlgrens appealed the summary-judgment ruling and the transfer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ML‑508D excludes coverage for the plumbing loss | ML‑508D does not apply or is inapplicable to coverage for real/personal property; policy grants plumbing coverage | ML‑508D unambiguously conditions coverage for unoccupied residences and excludes loss from plumbing discharge if requirements not met | ML‑508D unambiguously applies; coverage excluded because Dahlgrens were absent >72 hours and did not shut off water |
| Whether "unoccupied" is ambiguous or satisfied here | House was not "unoccupied" in conventional sense (furnished, checked by friend); terms ambiguous and should be construed for insured | ML‑508D defines "unoccupied" as absence >72 hours (lack of habitual human presence); Dahlgrens were away >72 hours | "Unoccupied" plainly means absence >72 hours; Dahlgrens’ absence met that definition; intermittent checks did not negate unoccupied status |
| Whether endorsement is a hidden trap or unconscionable (reasonable-expectations argument) | Endorsement is buried in fine print; insureds reasonably expected plumbing coverage and should not be deprived by small-print rider | Endorsement was conspicuous (listed on cover page, printed on blue paper) and not hidden; endorsements amend policies | Rejection of reasonable-expectations claim; ML‑508D is conspicuous and enforceable; no ambiguity to invoke contra proferentem |
| Whether this court can review transfer of Gale Force claims for lack of personal jurisdiction | Transfer was erroneous and inextricable from summary-judgment ruling; should be reviewed | Transfer occurred before appeal and no substantial issue about district court’s power to transfer was raised | D.C. Circuit lacks jurisdiction to review the transfer order (file had been sent to Delaware before appeal); appeal of summary judgment is reviewable as a final dismissal of a party |
Key Cases Cited
- Bermel v. Liberty Mut. Fire Ins. Co., 56 A.3d 1062 (Del. 2012) (unambiguous insurance language is given its plain meaning)
- O’Brien v. Progressive N. Ins. Co., 785 A.2d 281 (Del. 2001) (contract ambiguity construed against drafter; plain language controls)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (choice-of-law — federal diversity court applies forum conflict rules)
- Reuber v. United States, 773 F.2d 1367 (D.C. Cir.) (dismissal of a party and transfer treated as final for appellate jurisdiction)
- In re Briscoe, 976 F.2d 1425 (D.C. Cir.) (general rule that transferor circuit lacks jurisdiction after physical transfer; narrow exception when transfer power is in substantial dispute)
- Hercules, Inc. v. AIU Ins. Co., 784 A.2d 481 (Del. 2001) (unenforced filing defects in endorsements do not necessarily invalidate unambiguous endorsements)