Pakmark Corp. v. Liberty Mutual InsurancePakmark Corp. v. Liberty Mutual Insurance
Pakmark Corporation (“Pakmark”) appeals from a trial court order granting summary judgment in favor of Liberty Mutual Insurance Company (“Liberty Mutual”) on Pak-mark’s claim to recover for losses resulting from sewer backup arising under an insurance policy. The trial court ruled that the terms of the insurance policy excluded from coverage damage to Pakmark’s building caused by flood water and sewage backup. The granting of summary judgment was proper in that the insurance policy excluded loss caused directly or indirectly by flooding regardless of any sewage backup that contributed concurrently or in any sequence to the loss. We affirm.
Pakmark owns a building located in Chesterfield. The building is located approximately one to two miles away from the Missouri River. On the morning of July 30, 1993, Pakmark’s president, Keith Kovacik, was warned about possible floоding in the Chesterfield Valley Area. Kovacik and his employees raised some of the company’s equipment on skids and on tables in anticipation of the flood. The employees also built a sandbag levee around the building. A few weeks prior, Kovacik and some of his employees had noticed a foul odor emanating from the building’s plumbing system. Kova-cik noticed the odor again on July 30th. According to Kovaсik, the toilets and sinks had not overflown prior to that time.
Later that evening, at approximately 10:40 p.m., the levee protecting the Chesterfield Valley Area broke. Kovacik and his employees were told by the police to evacuate the area. Kovacik was the last person to leave the building around 11:30 p.m. At that time, there was no sign of impending flood water nor sewage overflow.
The follоwing morning, Kovacik saw the flooded Chesterfield Valley on the television news. He spotted the Pakmark building and an airplane which had floated up next to the building. Kovacik estimated that the flood waters appeared to be three to four feet high on the building. He did not know when the flood water reached the Pakmark building, but he estimated between midnight and 6:30 a.m.
Later that day, Kovacik went to the bluffs and observed the building with binoculars. The water had risen to approximately six feet against the building. The following day, the water reached its highest point at nine feet. On August 5, after the water in the building, had receded to five feet, Kovacik inspected the building. While inside the building, he noticed that almost all of Pak-mark’s equipment was covered by water. He determined that the flood water had reached a height of 8' 7 3/4" from the water marks on the wall.
After the water had completely receded, Kovacik observed a residue of two to four inches in the building. He described the residue as brownish black substance which contained chemicals, grease, and other contaminants. Pakmark claimed that the residue was sewage. The residue covered some
At the time of the damage to the Pakmark building, Pakmark was insured under an all-risk policy of insurance issued by Liberty Mutual. On November 23, 1993, Pakmark submitted its proof of loss and supporting documentation claiming a loss as a result of sewer backup. Liberty Mutual rejected the proof of loss and refused payment on the claim.
Pakmark subsequently filed suit against Liberty Mutual for breach of contract and vexatious refusal. Liberty Mutual defended on the grounds that Pakmark’s insurance policy did not provide coverage for its loss because of the following provision:
A. COVERED CAUSES OF LOSS
When Special is shown in the Declaration, Covered Causes of Loss means RISKS OF DIRECT PHYSICAL LOSS unless the loss is:
1. Excluded in Section B; Exclusions; or
2. Limited in Section C; Limitations; that follow.
B. EXCLUSIONS
1. We will not pay fоr 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.
sfc if:
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;
Both parties filed motions for summary judgment. On April 11, 1996, the trial court granted Liberty Mutual’s motion for summary judgment and denied Pakmark’s motion for summary judgment. The trial court found that summary judgment was appropriate because “any damage to Pakmark’s property resulting from ‘sewer backup’ occurred in combination with and concurrently with the damage caused by the flood,” and therefore, any damage caused by “sewage backup” was excluded by the policy. This appeal follows.
In its two points relied on, Pakmark contends, the trial court erred in granting Liberty Mutual’s motion for summary judgment. Pakmark first argues that the trial court erred because the all-risk policy does not specifically exclude loss from sewer backup, and therefore, under the language of the policy, there was coverage for its losses. Secondly, Pakmark contends the trial court erred in granting summary judgment because when an insured risk and an excluded risk сonstitute concurrent proximate causes of damage, the insurer is liable so long as one of the causes is covered by the policy. We disagree with both arguments.
A summary judgment is appropriate if the motion and response demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
ITT Commercial Finance v. Mid-Am. Marine,
Summary judgment is particularly appropriate if the issue to be decided is the construction of a contract that is unambiguous on its face.
Daniels Express and Transfer Co. v. GMI Corp.,
Pakmark argues that its loss resulting from sewer backup is covered by the all-risk policy issued by Liberty Mutual because sewer backup is not specifically excluded from coverage. Pakmark’s argument, however, ignores important language of the exclusionary clause contained in the policy. Although sewage backup is not per se excluded, the policy excludes from coverage “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.”
Under an all-risk insurance policy, recovery will be allowed for all fortuitous losses, unless the рolicy contains a specific provision expressly excluding the loss from coverage.
Missouri Commercial Investment Co. v. Employers Mutual Casualty Co.,
Both Pakmark’s president and the insurance adjuster conceded that the damage to the property was from a combination of sewer backup and flood water. Ferd Lasinski, a public adjuster, was assigned to adjust Pak-mark’s claim of loss. On September 28, 1993, Lasinksi met with Kovacik to inspect the building. By that point in time, the flood water was gone and the building had been partially cleaned up and hosed down. Lasin-ski observed sediments of varying colors on the floor which were six to seven inches in depth. Upon disturbing the sediments, he noticed that they released a strong odor. Lasinski also observed water marks on the walls seven to eight feet high. He also noted that there was a mark along the perimeter of the building which had a height of eight to nine inches and was much darker in color than the water marks. According to Lasin-ski, this mark was due to sewage.
Although Lasinski did not know how the flood water had entered the building, he believed that it entered through breaches in the building and through the sewer. It was La-sinski’s understanding that once the sewеrs backed up, the flood waters came in and it was a joint effort that raised the sewage up to that level. Lasinski made a claim of loss for anything which had been touched by the sewage material. He acknowledged, however, that the items contained in the proof of loss were damaged by a combination of sewage backup and flood water.
Richard Gumerman, an engineer hired by Pakmark, visited the building оn December 2, 1993. As part of his inspection, Gumer-man observed “black muck” spread across the floor which was about 1/4 inch deep. Gumerman said the black muck was sewage because it was similar to the material he had cleaned out of drain pipes. Gumerman made no chemical analysis of the black muck. In his opinion, the water that came through the sewers was a mixture of sewage water, ground water, and flood water. He further opined that this sewer water entered the Pakmark building before it was inundated by the flood. According to Gumerman, flood water contains organic materials, waste, animal parts, and various other materials. Once the flood waters receded, these materials came to rest upon- the building’s floor, forming part of the sludge or “black muck” Gum-erman had described.
George Sallwasser, аn engineer hired by Liberty Mutual, was of the opinion that flood water entered the sewage system and came out into the Pakmark building. In a report prepared by Sallwasser, he concluded that most of the water going through the sewer system would have been flood water. Once the flood water entered the sewage system, it would have pushed any amount of wastewa-ter that existed in the system ahead of it.
Pakmark maintains that recovery is not precluded by this provision because under Missouri law where an insured risk and an excluded risk constitute proximate causes of damage, an insurer is liable so long as one of the causes is covered by the policy.
Braxton
The same provision in the Liberty Mutual policy existed in the insurance policy in
American Motorists Insurance Co., v. R & S Meats,
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 аny sequence to the loss.
Id. at 797 (emphasis in original). The insurer argued that if the loss was covered by the general grant of coverage but excluded by some exclusion, the above exclusion barred coverage. The trial court rejected insurer’s argument, relying on case law which held that when a policy expressly insures against a loss caused by one risk but excludes a loss caused by another risk, coverage is extended to the loss caused by the insured risk even though the excluded risk is a contributory cause. The appellate court stated that the trial court erred in rejecting insurer’s argument because the policy’s provision expressly barred coverage in an overlap situation and that this type of provision was not present in the cases cited by the trial court. Id. 1
In another case in which the same prоvision was included in the insurance policy,
Alton v. Manufacturers & Merchants Mutual Insurance Co.,
The Supreme Judicial Court of Massachusetts rejected the insured’s argument. The court held that even if the insurance policy covered damage by the tenant’s criminal activity, the following provision excluded coverage: “We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.” Id. 2
Pakmark also cites
Pace Properties, Inc. v. American Mаnufacturers Mutual Insurance Co.,
In Pace, the court distinguished between policy exclusions which exclude loss or damage “regardless of any other cause or event that contributes concurrently or in any sequence to the loss” and policy exclusions which do not. The insurance policy in Pace divided exclusions into two separate paragraphs. Paragraph one applied “regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” Pаragraph two provided that the insurer “will not pay for loss or damage caused by or resulting from the following: ...” The deterioration exclusion followed paragraph two. This court rejected insurer’s argument that the deterioration exclusion denied the insured coverage. Since paragraph two omitted the “regardless of any other cause” language found in paragraph one, the exclusions under paragraph two only applied when they were the sole cause of loss. Id. at 886. Thus, coverage would have been denied if deterioration was the sole cause of loss. However, this court noted that if the insured presented evidence of a covered cause of loss, then the insured would have made a submis-sible ease. Id.
In a similar case to
Pace,
a homeowner sued an insurer to recover for loss which occurred when fuel oil spilled on adjacent property and later contaminated the homeowner’s property.
Jussim v. Massachusetts Bay Ins. Co.,
The Supreme Judicial Court of Massachusetts affirmed the trial court’s judgment, noting that the insurance policy contained a general exclusion that provided: “We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.” The court stated that if the pollution exclusion had been listed in the general exclusion provision, following the above language, the insured’s claim would have been excluded. Id. at 957-58.
In the present case, unlike Pace or Jussim, the flood exclusion was listed under the general exclusion provision. The Liberty Mutual policy clearly provides that there is no coverage “for loss or damage caused directly or indirectly,” among other things, flood water, and “such loss or damage is excluded regardless of any other cause or event [i.e. sewage backup] that contributes concurrently or in any sequence to the loss.” Section B.l of the Liberty Mutual policy provides that an exclusion is an exclusion regardless of any other cause that contributes to the loss, either concurrently or in any sequence to the loss.
Pakmark also contends the trial court erred in granting Liberty Mutual’s motion for summary judgment because representatives of Liberty Mutual have openly admitted that the insurance policy provided coverage for sewer backup. We disagree.
Pakmark cites depositions from Liberty Mutual representatives, indicating that in certain circumstances, damage from sewer backup may be covered by the policy. One representative stated that whether a sewer backup claim was covered by the policy depended upon the facts of the case. According to Pakmark, when representatives of an insurer openly admit that an insured’s loss is covered under an insurance policy it issued, the insurance company is bound to act consistently with such an admission of coverage.
See Eagle Star Insurance Co. v. Family Fun Inc.,
The facts of this case are distinguishable from Mo. Commercial Investment. Liberty Mutual’s representatives did not state that Pakmark’s loss was covered by the policy. Instead, the representatives stated that sewer backup may be covered depending upon the circumstances of the case. One representative commented:
“(jjust because its not excluded in that one section doesn’t mean that a sewer backup claim has some other elements to it that might be excluded someplace else within the policy, so I can’t give a carte blanche answеr to whether or not sewer backup is a covered item or anything is a covered item.”
The trial court properly granted Liberty Mutual’s motion for summary judgment because the policy unambiguously excluded coverage for loss caused directly or indirectly by flooding regardless of any sewage backup that contributed concurrently or in any sequence to Pakmark’s loss. We are compelled to construe the policy as written, and therefore, affirm the granting of summary judgment.
Notes
. The court, however, found that none of the policy’s exclusions applied, and therefore, no overlap situation existed.
American Motorists,
.
See Quadrangle Development Corp. v. Hartford Ins.,