462 Mass. 715 | Mass. | 2012
Surabian Realty Co., Inc. (Surabian), appeals from the judgment entered against it on the parties’ cross-motions for summary judgment. At issue is whether the motion judge erred when he concluded, as a matter of law, that an insurance policy Surabian had purchased from NGM Insurance Company (NGM) did not cover flood damage resulting from a clogged parking lot drain. We affirm.
1. Background. We summarize the undisputed material facts found in the summary judgment record. Surabian owns and
On June 29, 2009, heavy rains fell around the area of the property. About thirty minutes after the storm began, water stopped flowing down the parking lot drain. Subsequent examination revealed that the drain had become clogged with debris. As a result, the heavy rains collected in the parking lot and seeped under the door of the building, flooding its lower level. The flooding caused damage to the carpeting, baseboards, and walls, totaling approximately $34,000.
Surabian had insured the property with a business owner’s policy issued by NGM. The contract was an “all risk” insurance policy, covering damage from any peril that was not specifically excluded. One of the exclusions was for water damage. The relevant portion of the policy reads:
“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) Water that backs up or overflows from a sewer, drain or sump; or
“(4) Water under the ground surface pressing on, or flowing or seeping through:
“(a) Foundations, walls, floors, or paved surfaces;
*717 “(b) Basements, whether paved or not; or
“(c) Doors, windows, or other openings.
“But if Water as described in B.l.g.(l) through B.l.g.(4) results in fire, explosion, or sprinkler leakage, we will pay for the loss or damage caused by that fire, explosion or sprinkler leakage.”
Surabian had also purchased, at additional cost, the “OMNI Gold” indorsement to the policy. This five-page supplement replaced individual paragraphs in the business owner’s policy. It amended the water exclusion as follows:
“G. Water Backup.
“Paragraph B.l.g.(3) of the BUSINESSOWNERS SPECIAL PROPERTY COVERAGE FORM is deleted and replaced by the following:
“The most we will pay for loss or damage caused by water that backs up or overflows from a sewer, drain or sump is $25,000 for any one occurrence.”
Surabian filed a claim with NGM under the indorsement. After investigating the cause of the flooding, NGM denied the claim. NGM reasoned that the damage resulted at least in part from surface water, which was excluded by the policy.
The present action ensued. Surabian’s complaint alleged breach of contract, breach of the implied covenant of good faith and fair dealing, unfair or deceptive insurance practices in violation of G. L. c. 176D, and unfair or deceptive acts or practices in violation of G. L. c. 93A. The complaint also sought declaratory relief. Both parties filed motions for summary judgment on all counts. A judge in the Superior Court granted NGM’s motion, finding that the damage was caused at least in part by “surface water.” Although the damage was also partially caused by water that had backed up from a drain, the “anticoncurrent cause” provision of the business owner’s policy excluded coverage for surface water “regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” We granted Surabian’s application for direct appellate review, and the case was paired for argument with Boazova v. Safety Ins. Co., ante 346 (2012).
“Interpretation of an insurance policy is no different from interpretation of any other contract.” Citation Ins. Co. v. Gomez, 426 Mass. 379, 381 (1998). We interpret all words in their usual and ordinary sense, and construe policies as a whole, without according special emphasis to any particular part over another. Mission Ins. Co. v. United States Fire Ins. Co., 401 Mass. 492, 497 (1988). “When the policy language is ambiguous, ‘doubts as to the intended meaning of the words must be resolved against the insurance company that employed them and in favor of the insured.’ ” Boazova v. Safety Ins. Co., supra at 350-351, quoting August A. Busch & Co. of Mass. v. Liberty Mut. Ins. Co., 339 Mass. 239, 243 (1959). We may conclude that language is ambiguous only “where the phraseology can support a reasonable difference of opinion as to the meaning of the words employed and the obligations undertaken.” Bank v. Thermo Elemental Inc., 451 Mass. 638, 648 (2008), quoting President & Fellows of Harvard College v. PECO Energy Co., 57 Mass. App. Ct. 888, 896 (2003). “[A]n ambiguity is not created simply because a controversy exists between the parties, each favoring an interpretation contrary to the other.” Boazova v. Safety Ins. Co., supra at 351, quoting Citation Ins. Co. v. Gomez, supra.
Our first task, then, is to construe the phrases “surface water” and “[wjater that backs up or overflows from a sewer, drain or sump.” “Surface water” is defined as “waters from rain, melting snow, springs, or seepage, or floods that lie or flow on the surface of the earth and naturally spread over the ground but do not form part of a natural watercourse or lake.” DeSanctis v. Lynn Water & Sewer Comm’n, 423 Mass. 112, 115 n.6 (1996). See Boazova v. Safety Ins. Co., supra at 354, and authorities cited. Rain that collects on a paved surface, such as a parking
No Massachusetts case has defined the phrase “[w]ater that backs up or overflows from a sewer, drain or sump.” Courts analyzing this phrase in other jurisdictions have concluded that it refers to “damage caused by water that has entered a drain and then is subsequently forced out from or through that drain.” Drutz vs. Scottsdale Ins. Co., U.S. Dist. Ct., No. WMN-10-3499, slip op. at 8 (D. Md. Feb. 28, 2012). There is some dispute within the case law regarding whether the phrase “backs up . . . from a sewer” requires a reversal of water flow or merely a diversion within a blocked system. See Front Row Theatre, Inc. v. American Mfrs. Mut. Ins. Cos., supra at 1348 (phrase encompasses damage from water that was diverted through different exit); Dent vs. Allstate Indem. Co., Va. Cir. Ct., No. CL-2010-3481, slip op. at 5-6 (Mar. 23, 2011), and cases cited. These cases are consistent, however, that “the water [must have] occupied the pipe or drain before it caused the damage.” Dent vs. Allstate Indem. Co., supra at 5. Drutz vs. Scottsdale Ins. Co., supra at 7-12, and cases cited.
Construing these clauses in combination, we interpret the insurance contract, as amended by the indorsement, to exclude damage caused by flood waters that spread over the surface of the ground without having entered a drain, but to cover damage caused by water that backed up after entering a drain.
For purposes of summary judgment, the parties agree that the present damage resulted from the combination of water that backed up after entering the parking lot drain and water that, as a result of the blockage, never entered the drain and remained surface water. The damage thus resulted from the combination of a covered peril and an excluded peril.
When damage arises from multiple causes, an “anticoncurrent
Surabian’s business owner’s policy contains an anticoncurrent cause provision, quoted above, at the beginning of the exclusions section. The provision explicitly states that damage caused by an enumerated exclusion is “excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” Numerous courts have barred coverage based on an anti-concurrent cause provision under virtually identical circumstances, when an obstruction caused a flood consisting of both surface water and backed up water. See, e.g., Front Row Theatre, Inc. v. American Mfrs. Mut. Ins. Cos., supra at 1349; Hirschfield v. Continental Cas. Co., supra; Casey v. General Acc. Ins. Co., supra. The anticoncurrent cause provision likewise forecloses Surabian’s claim.
Surabian argues that the indorsement covers all flood damage caused even indirectly by a drain backup, or at the very least that the policy is ambiguous. Surabian bases its reading on the location of the coverage for water backup in an indorsement. The indorsement does not restate the surface water exclusion or the anticoncurrent cause provision. It simply provides coverage for damage caused by “water that backs up or overflows from a sewer, drain or sump.” A reasonable consumer, purchasing the indorsement at additional cost, arguably would not realize that damage caused by surface water that pooled due to a drain backup remained excluded.
Surabian attempts to draw support from Bishops, Inc. v. Penn Nat’l Ins., 984 A.2d 982 (Pa. Super. Ct. 2009), which found an
Surabian’s reliance on Bishops is unavailing, because the indorsement in that case was written more broadly than the indorsement in the present case. That indorsement covered any loss or damage “caused by a back up . . . or an overflow this indorsement covered loss or damage “caused by water that backs up or overflows” (emphasis added). The former language is more expansive than the latter and might reasonably encompass damage caused by surface water that collected as a result of a backup. Front Row Theatre, Inc. v. American Mfrs. Mut. Ins. Cos., 18 F.3d 1343, 1348 (6th Cir. 1994). In addition, that indorsement overrode subsection B.1.g.(3), stating that it “does not apply,” but this indorsement “deleted and replaced” the subsection (emphasis added). By situating the new coverage within the structure of the original policy, NGM clarified that all other provisions of the original policy continued to apply, including the surface water exclusion and the anticoncurrent cause provision. Courts have denied coverage on such facts when an indorsement “deleted” the exclusion for water that backed up, explicitly retaining the rest of the standard policy. See, e.g., Doylestown Elec. Supply Co. vs. Maryland Cas. Ins.
We further observe that the Bishops court was motivated, at least in part, by expressions in Pennsylvania’s “own jurisprudence that appear to hold concurrent causation exclusions in disfavor.” Bishops, Inc. v. Penn Nat’l Ins., supra at 993. By contrast, “[o]ur jurisprudence has never suggested . . . that denying enforcement of an anticoncurrent cause provision in a[n] . . . insurance policy is necessary to protect some aspect of the public welfare.” Boazova v. Safety Ins. Co., ante 346, 357 (2012). The present case gives us no reason to question that policy.
Finally, we discern no merit in Surabian’s claim that our interpretation renders the indorsement illusory. As Surabian recognizes, the indorsement provides coverage for water damage resulting from the backup of an interior drain at the property. Coverage would likewise be triggered when an exterior sewer or drain backs up due to a burst water main. In addition, neither the surface water exclusion nor the anticoncurrent cause provision would bar coverage when heavy rain enters a sewer system, is diverted out of the system, and is then the sole cause of damage to property. The water would have lost its character as surface water on entering the sewer system and, at the moment of damage, the water would have been defined solely as drain or sewer water. A temporary characterization as surface water before the onset of damage does not deem the damage to be indirectly caused by surface water. Selective Way Ins. Co. v. Litigation Tech., Inc., 270 Ga. App. 38, 40-41 (2004) (surface water exclusion and anticoncurrent cause provision inapplicable when rainwater gathered into thirteen-foot-deep hole, entered sewer pipe, and flowed into building). See Front Row Theatre, Inc. v. American Mfrs. Mut. Ins. Cos., supra at 1347-1348 (portion of damage attributable to water that had entered sewer system not caused by surface water); M & M Corp. of S.C. v.
3. Conclusion. Because NGM’s denial of coverage was based on a correct interpretation of its insurance policy, the judge properly denied all of Surabian’s claims, including those under G. L. c. 93A and G. L. c. 176D. See Lumbermen’s Mut. Cas. Co. v. Offices Unlimited, Inc., 419 Mass. 462, 468 (1995).
Judgment affirmed.