Noran Neurological Clinic, P.A. v. The Travelers Indemnity CompanyNoran Neurological Clinic, P.A. v. The Travelers Indemnity Company
Noran Neurological Clinic, P.A., (Noran) brought suit against its property insurer, The Travelers Indemnity Company (Travelers), alleging breach of
contract;
a deceptive trade practice in violation of
I.
Noran is a neurological medical clinic with its principal office located in south Minneapolis. Noran’s radiology department is located on the lower level of the building and has large windows facing an open-to-the-sky, landscapеd “atrium.” From the outside, the windows are nearly even with the ground. The base of the atrium is approximately seven feet below street level. A drain, which is located in the southeast corner of the atrium, leads to a catch basin and storm drain. On July 1, 1997, Minneapolis received excessive rainfall occurring during a one-hour period. At some point during the storm, the atrium filled with water comprised of rain falling on the atrium and water flowing into the atrium from the nearby flooded street, causing at least one of the clinic’s windows to break and water to rush into the radiology department. The water destroyed most of the office furniture, imaging equipment, and computers located in the department. Noran believed that debris collected in the atrium, blocked the atrium’s drain, аnd culminated in the buildup of water breaking the window.
At the time of this incident, Noran owned a commercial property insurance policy written by Travelers that provided coverage for physical loss or damage to the clinic, subject to specified exclusions. Noran submitted a claim excеeding $1.6 million under its insurance policy with Travelers, which Travelers denied pursuant to the policy’s surface water exclusion. This provision mandated that any loss caused either directly or indirectly by surface water was excluded from coverage. Noran subsequently filed suit, and the case was submitted on motions for summary judgment.
Noran argued that Travelers improperly denied coverage and asserted that Travelers should have provided coverage consistent with the blocked drain exception found within a subsection of the water exclusion provision of the policy. The district court disagreed аnd held as a matter of law that the blocked drain exception was inapplicable to Noran’s loss, which was caused by surface water. The distriсt court also concluded that because Travelers’ denial of coverage was justified by the policy language, Noran’s statutory claim neсessarily failed. Noran now appeals.
II.
Summary judgment is appropriate when no genuine issue of material fact remains, and the moving party is entitled
When reviewing the construction of insurance policies, general contract principles govern.
See Progressive Specialty Ins. Co. v. Widness,
In relevant part the Travelers policy provides:
B. EXCLUSIONS
1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.
g. Water
(1) Flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not;
(2) Mudslide or mudflow;
(3)(a) Water or sewage that backs up or ovеrflows from a sewer, drain or sump.
(b) Except for septic tank and cess pool systems this exclusion does not apply when the cause of water or sewage overflow occurs due to a blockage which originates on the described premises.
(Appellant’s App. at A-81-A-82 (emphasis added).) We cannot agree with Noran that it is reasonable to interpret the exception contained in provision 3(b) as pertaining to all of the prior provisions contained within section g. As the district court keenly observed, the “water or sewage overflow” language contained within the 3(b) blockagе exception mirrors the language contained in 3(a), and only 3(a). Thus, the blocked drain exception only applies when “water or sewage ... backs up or overflows from a sewer, drain, or sump.” (See Appellant’s App. at A-82.) Further, we find the placement of the exclusion telling. Given the structure of the policy, it appears to us that provision 3(b) only modifies 3(a) and not section g in its entirety. In the final analysis, if Travelers had wanted to draft an exception to the surface water exclusion covering the peril at issue, it could have done so, but it did not. No-ran merely attempts to inject ambiguity into the contract. As such, Noran’s view proposes a strained reading of the contract language contrary to the contract’s plain meaning and therefore must fail. Accordingly, we hold the policy is not ambiguous, and the blocked drain exception plainly does not apply to the surface watеr situation of this case.
Finally, we agree with the district court’s conclusion that Noran’s Minnesota statutory claim was premised upon the alleged wrongful denial of coverage. Because the policy language justified Travelers’ denial of benefits, this premise was invalid and summary judgment as to this claim was proper. 3 Noran’s new argument that Travelers never intended to grant coverаge under the blockage exception is similarly ineffective because of our conclusion that the blocked drain exception simply does not apply to the situation at hand.
III.
Accordingly, we affirm the judgment of the district court.
Notes
. The Honorable Donovan W. Frank, United States District Judge for the District of Minnesota.
. There exists a dispute over whether Noran pleaded claims under the Uniform Deceptive Trade Practices Act, the Prevention of Consumer Fraud Act, or the Unlawful Trade Practices Act. This dispute is not material, however, because we conclude that the factual predicate underlying the claim stated in the complaint under any of these statutes is invalid because there was no wrongful denial of coverage.