MEMORANDUM OPINION AND ORDER
THIS MATTER is before the Court on Plaintiff Taja Investments LLC and Taja Construction & Rehab, Inc. (“Plaintiff’ or “Taja”) and Defendant Peerless Insurance Co., a/k/a Liberty Mutual Insurance Co.’s (“Defendant” or “Peerless”) Cross-Motions for Summary Judgment under Federal Rule of Civil Procedure 56. (Doc. 33; Doc. 31). This case concerns Plaintiffs insurance coverage for the collapse of a wall at a Washington, DC residential property where Plaintiff was conducting renovations. The issue before the Court is whether either of the two exclusions identified by Peerless in the insurance policy, the workmanship exclusion (“Workmanship exclusion”) or the earth movement exclusion
I. BACKGROUND
The material facts in this case are not in dispute. Plaintiff Taja is a construction company organized under the laws of Maryland with its principal place of business in Maryland, and Defendant Peerless is an insurance company organized undеr the laws of New Hampshire and maintains its principal place of business in New Hampshire. (Compl. at ¶¶ 1-2). The insurance policy (“the Policy”) is’ an “all risk” policy which covers all risk of loss except those expressly excluded under the Policy’s terms. (Compl. at ¶ 8; Doc. 36-1, at 73). The insured property at issue is a row house on New York Avenue in Northwest Washington, DC. Taja began renovating the property’s four-to-fíve foot basement as part of a restoration plan, which involved excavating the existing crawl space in order to create a depth of nine feet to allow living areas to be created, (Doc. 34, at 1-2). The project’s structural plans reveal that Tаja was to excavate the basement in discrete stages, underpinning the structure at every step to prevent risk of collapse. (Doc. 40, at 3-4).
Taja principal Michael Watson received cautionary warnings about the importance of underpinning from project engineer Dennis Anibaba as far as three weeks prior to the incident. (Doc. 36-3, at 21:3-27:20). Approximately two days before the incident, Brian Brown, the owner of Nex-tGen Construction that had renovated the building next door, raised his concern with Watson about the lack of underpinning. He informed Watson that .he was “concerned about the stability of [the] below grade soil ... [the] subcontractor is not doing what he should be doing.” (Id. at 10:6-13:6; Doc. 36-5, at 6:14-9:9). Owen Wilson, owner of the excavation contractor, confirmed that the traditional method is to do a “little bit of digging and [then] do your underpinning,” and inserted a special clause in the contract with Taja to refuse responsibility for any collapse due to lack of underpinning. (Doc. 36-6, at 19:20-21:14).
On June 10, 2014, the east wall of the building collapsed. (Compl. at ¶ 7). At the time of the wall’s collapse, Watson , confirmed that no underpinning had been performed. (Doc. 36-4, at 81:9-82:25). Taja paid $142,275 for the immediate shoring and bracing of the damages following the collapse, and repairs to place the building back into pre-collapse condition are $407,885.89, not including any costs for excavation or installation of a foundation. (Doc. 34, at 3). Taja made an insurance claim on Peerless, and Peerless visited the site on June 20, 2014 for inspection. (Doc. 34, at 3-4).- Peerless hired engineer Mr.
In February 2015, eight months after the collapse and Peerless’ site inspection, Peerless stated it would not cover Taja’s sustained losses, citing thаt both the Workmanship exclusion and the Earth Movement exclusion entitled them to withhold coverage. (Doc. 34, at 8; Doc. 34-6, at 1-2). The Workmanship exclusion states that “defects, errors, and omissions relating to design, specifications, construction, or workmanship are not covered, but if loss by another covered peril results, Peerless will pay for the resulting loss.” (Doc. 34-1, at 75-76). The Earth Movement exclusion states that Peerless “will not pay for loss caused by any earth movement (other than sinkhole collapse),” and defines the term as encompassing “any movement or vibration of the Earth’s surface including but not limited to earthquake, landslide, mudflow, mudslide, mine subsidence, or sinking, rising, or shifting of the Eаrth.” {Id. at 73).
After Peerless refused to cover Taja’s losses, Taja filed suit in the Circuit Court of Fairfax County on August 28th, 2015, alleging one count of breach of policy of insurance. (Compl. at ¶ 1). Taja maintains that it is entitled to damages approximating $400,000, plus interest from the date of loss until the time of judgment at the legal rate, with other associated relief costs that the Court may seem fit. {Id. at 4). Peerless subsequently filed for removal to this Court pursuant to 28 U.S.C. §§ 1441 and 1446. (Id. at ¶ 1). This case is properly before the Court pursuant to the diversity jurisdiction requirements set out in 28 U.S.C. § 1332. Taja and Peerless subsequently filed cross-motions for summary judgment on May 27, 2016. (Doc, 31; Doc. 33).
II. DISCUSSION
A. Standard of Review
Under Federal Rule of Civil Procedure 56, the Court must grant summary judgment if the moving party demonstrates 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. Fed. R. Civ. P. 56(c) (2013).
In reviewing a motion for summary judgment, the Court views the facts in a light most favorable to the nonmoving party. Boitnott v. Corning, Inc.,
A “material fact” is a fact that might affect the outcome оf a party’s case. Anderson,
A “genuine” issue concerning a “material” fact arises when the evidence is sufficient to allow a reasonable jury to return a verdict in the nonmoving party’s favor. Resource Bankshares Corp. v. St. Paul Mercury Ins. Co.,
B. Analysis
The Court grants Defendant’s Motion for Summary Judgment and denies Plaintiffs Motion for Summary Judgment for two reasons. First, the Workmanship exclusion is applicable because the Court readily finds that Plaintiffs own acts, errors, and omissions related to the over-excavation of the basement coupled with the failure to install necessary underpinning to secure the building’s foundation caused the east wall’s collapse. The Court further holds that the ensuing loss exception fails to restore coverage because no other independent or interceding covered peril contributed to the collapse other than Plaintiffs excluded conduct. Second, the Earth Movement exception is also applicable becausе although all of Plaintiffs relevant conduct involved “below grade” soil and clay, the Policy expressly excludes coverage for activity that occurred at the earth’s surface level, irrespective of whether it is below grade or not. In sum, because the undisputed material facts show that both exclusions under the Policy are applicable, Defendant is entitled to judgment as a matter of law.
A. The Workmanship Exclusion
The Court grants Defendant’s Motion for Summary Judgment and denies Plaintiffs Motion for Summary Judgment, because the Policy’s Workmanship exclusion applies in light of Taja’s acts, errors, and omissions involving the excavation and failure to install underpinning resulted in the east wall’s collapse. Furthеrmore, the ensuing loss exception fails to restore coverage because no independent or superseding act that is covered under the Policy contributed to the collapse.
1. Cause of Collapse
A workmanship exclusion is applicable when the insured’s loss is attributable to the quality of the constructed property and arises from defects in the materials or process used by the insured or its agents to construct the property. See Limbach Co. v. Zurich Am. Ins. Co.,
In the present case, Defendant’s Motion for Summary Judgment is granted because the Pokey’s Workmanship exclusion is clearly applicable to Plaintiffs undisputed conduct. As Defendant asserts, and Plaintiff tacitly acknowledges, the cause of the collapse is directly attributable to the acts and omissions of Plaintiff in excavating the entirety of the basement without performing any underpinning to secure the foundation of the walls.
2. Ensuing Loss Clause
Once an insured triggers the workmanship exclusion, courts generally interpret “ensuing loss” clauses as restoring coverage to the insured only when an independent and covered loss occurs subsequent to the excluded acts or omissions giving rise to losses. Virginia precedent clarifies that “[a]n exception to an exclusion does not create coverage where none exists.” PBM Nutritionals LLC v. Lexington Ins. Co.,
A majority of courts in other jurisdictions similarly hold that the ensuing loss exception is applicable when the loss is the result of an independent or superseding cause that is covered under the terms of the policy. See, e.g., Arnold v. Cincinnati Ins. Co.,
Courts adopting this apprоach have declined to restore coverage where the insured’s sustained losses resulted from the effects of an excluded loss over time. In Alton Ochsner Medical Foundation v. Allendale Mutual Insurance Co., the Fifth Circuit interpreted an analogous workmanship exclusion with an ensuing loss provision as failing to restore coverage to the collapse of a defectively made wall.
However, some courts. have been reluctant to impose a requirement of an independent and additional covered cause before restoring coverage. The court in Selective Way Insurance Co. v. National Fire Insurance Co. of Hartford distinguished the loss or damage in covering the faulty work itself from the loss caused to property “wholly separate” from the defective workmanship.
Plaintiffs remaining argument rests on attempting to distinguish the cost of replacing the workmanship itself, which Plaintiff concedes is not covered, from the cost of replacing the structure, which Plaintiff argues is ensuing because collaрse itself is covered and because Plaintiffs losses resulted from the collapse of the east wall. However, such a distinction is unavailing because Plaintiff merely attempts to separate cause and effect. By saying the collapse is a covered peril that caused the loss in question, Plaintiff wishes to either ignore or separate the cause of the collapse, which is Plaintiffs conduct expressly excluded in the Workmanship exclusion. Plaintiff is essentially asking the Court to write the Workmanship exclusion out of the Policy, because under Plaintiffs theory any losses that occur subsequent in time to the excluded workmanship are restored simply because оf the passage of time. Such a theory is contrary to basic Virginia principles of contract interpretation. See TM Delmarva Power, LLC v. NCP of Virginia, LLC,
Plaintiff relies on cases that are not applicable or are otherwise not persuasive. Plaintiffs argument depends heavily on Vision One, but this ruling impermissibly abrogates the scope of the workmanship exclusion. See TM Delmarva Power, LLC,
Plaintiff also relies on Selective Way and Doto Chemical, both of which are readily distinguishable from the case at bar. Selective Way stands merely for the proposition that damaged items separate from the defective work itself were covered under that specific policy.
Accordingly, the Court holds that the Policy’s Workmanship exclusion is applicable because the undisputed acts, errors, and omissions of Plaintiff, namely, the excavation and failure to install necessary underpinning to secure the building’s foundаtion, caused the east wall’s collapse. Furthermore, the ensuing loss exception fails to restore coverage because no other independent act contributed to the collapse other than Plaintiffs excluded conduct. Therefore, because the undisputed facts show Defendant is entitled to judgment as a matter of law, the Court grants Defendant’s Motion for Summary Judgment and denies Plaintiffs Motion for Summary Judgment.
B. The Earth Movement Exclusion
Additionally, the Court grants Defendant’s Motion for Summary Judgment and denies Plaintiffs Motion for Summary Judgment under the Earth Movement exclusion because although the relevant earth movement activity occurred “below grade,” Plaintiffs relevant conduct still occurred at the earth’s surface. Plaintiff argues that the Earth Movement exclusion is only applicable to movements or vibrations at the earth’s surface, and therefore the Policy affords coverage for earth movements or vibrations below the Earth surface. Defendant argues that Plaintiffs activity occurred at the earth’s surface level despite being below grade, and also that Plaintiff is impermissibly attempting to in
Under Virginia law, insurance policies are treated as ordinary contracts and subject to the same rules of interpretation. The Virginia Supreme Court directs courts to give words “their ordinary and customary meaning when they are susceptible of such construction.” Hill v. State Farm Mut. Auto, Ins. Co.,
Virginia courts are reluctant to change the language of an insurance policy because the function of the court is “not to make a new contract for the parties different from that plainly intended and thus create a liability not assumed by the insurer.” Nat’l Hous. Bldg. Corp.,
This court specifically has addressed the scope of earth movement exclusions in analogous situations. In Sentinel Associates v. American Manufacturers Mutual Insurance Co., this court limited the scope of a general term to “embrace only objects similar in nature to those things identified in the specific [terms]” listed in the policy.
In the present case, the Earth Movement exclusion covers Plaintiffs conduct because the terms of the policy are unam
The Earth Movement exclusion is also applicable to the relevant conduct in question because the terms of the policy plainly apply to earth movement at the earth’s surface with no reference to the original grade, and Plaintiff may not attempt to introduce ambiguity in order to redefine the Policy. See Eure v. Norfolk Shipbuilding & Drydock Corp.,
Plaintiff alternatively argues that the term “surface” is itsélf ambiguous, and as a result that this Court should apply the doctrine of contra proferentum and resolve the ambiguity in favor of Plaintiff as the insured party. Plaintiff asserts that an alternative definition of “surface” encompasses only the “external or superficial aspect of’ the еarth. However, Plaintiff cites no authority to support this assertion. Moreover, the Virginia Supreme Court in Eure clarified that ambiguity cannot be established based on addition of language and terminology not contained in the initial writing, which is what Plaintiff intends to do by introducing references to “grade” to alter the Policy.
Using the plain meaning of these words, it is evident that while the movement that caused the east wall’s collapse occurred below grade (in the basement, below the
Plaintiff also argues that a different Peerless insurance policy, which excludes soil conditions including “contraction, expansion ... improperly compacted sоil and the action of water under the ground surface,” is evidence that Defendant intentionally meant to omit such exclusionary reach in the present Policy. (Doc. 34-13, at 25). This argument is not persuasive because the other policy included the language “under the ground surface” to specifically exclude the movement of water, something Defendant at no point has argued in the present case. The Policy here contains no express mention of soil conditions or any intention to exclude action of water below the ground surface. Therefore, the most Plaintiff could assert is that Defendant did not intend to exclude certain soil conditions or movement of water below the earth surface, which would have no bearing on the type of earth movement at issue here.
Accordingly, the Court grants Defendant’s Motion for Summary Judgment and denies Plaintiffs Motion for Summary Judgment because the Earth Movement exclusion is applicable because although Plaintiffs relevant conduct occurred below grade, the earth movement activity still occurred at the earth’s surface level.
III. CONCLUSION
The Court grants Defendant’s Motion for Summary Judgment and denies Plaintiffs Motion for Summary Judgment because the undisputed material facts show Defendant is entitled to judgment as a matter of law for two reasons. First, the Workmanship exclusion applies because the acts, errors, and omissions of Plaintiff related to the failure to install underpinning to secure the building’s foundation caused the east wall’s collapse. Furthermore, the ensuing loss exception fails to restore coverage because there was no independent or superseding covered peril that contributed to the Plaintiffs sustained losses. Second, the Earth Movement exclusion is applicable because although Plaintiffs relevant conduct occurred below grade, the earth movement activity still occurred at the earth’s surface level. For the foregoing reasons.
IT IS HEREBY ORDERED that Defendant Peerless’ Motion for Summary Judgment (Doc. 33) is GRANTED;
IT IS FURTHER ORDERED that Plaintiff Taja’s Motion for Summary Judgment (Doc. 31) is DENIED.
IT IS SO ORDERED.
Notes
. In Plaintiff's Opposition to Defendant's Motion for Summary Judgment and Plaintiff's Reply brief, Taja introduces and reiterates a claim that the official cause of the collapse is unknown and cannot be known because no one was present on-site at the time of the collapse (Doc. 41, at 8-9). However, Plaintiff's briefs contain numerous instances in which Plaintiff either tacitly or directly states that the excavation and lack of. underpinning contributed to the collapse (Doc. 34, at 21; at 24; at 26, at 27-28, at 30).
. "[The excavation] left the portion of soil below the wall and adjacent to the excavation in an unstable condition. It is our opinion that the soil below the wall failed causing the wall to move downward and inward into the excavation leading to the loss of wall support and the partial collapse observed.”
. Black's Law Dictionary defines "surface” as "[t]he top layer of something, especially of land.” Surface, Black’s Law Dictionary (10th Ed. 2014); see also Merriam-Webster Dictionary ("the upper layer of an area of land or water ... the exterior or upper boundary of an object or body ...”); Oxford Dictionary ("the outside part or uppermost layer or area”). By contrast, "grade” in the construction context is defined as a "datum or reference level, especially ground level” Meiriam-Webster Dictionary; see also Below Grade, Investor Words Glossary ("any structure or part of a structure that is below the surface of the ground that surrounds it ") (emphasis added) available at http://www.investorwords.eom/ 12937/below_grade.html.