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Peters Township School District v. Hartford Accident and Indemnity Co.

filed as amended december 11 1987.: November 13, 1987.

PETERS TOWNSHIP SCHOOL DISTRICT, APPELLANT
v.
THE HARTFORD ACCIDENT AND INDEMNITY COMPANY



Appeal from the United States District Court for the Western District of Pennsylvania (Pittsburgh), D.C. Civil No. 85-1731.

Seitz and Mansmann, Circuit Judges and Debevoise, District Judge.*fn*

Author: Mansmann

Opinion OF THE COURT

MANSMANN, Circuit Judge.

In this diversity case we are called upon to determine the scope of an exclusionary "earth movement" clause in an "all risk" insurance policy under Pennsylvania law. We conclude that the district court was correct in holding that the exclusion at issue would bar coverage for damage to the school buildings brought about by spontaneous, natural events but not for earth movement brought about by man-made causes such as mine subsidence, the acknowledged cause of the damage to the Middle School.

We further find, however, that the district court erred as a matter of law in finding that the mine area beneath the two schools returned to "the keeping of nature" and thus the damage was caused by a natural phenomenon. We will, therefore, reverse the grant of summary judgment in favor of the insurer and will remand with instructions for the district court to enter partial summary judgment for the school district with respect to the defense of the "earth movement" exclusion in regard to the Middle School. We will vacate the judgment with respect to the Elm Grove School, about which a genuine issue regarding causation exists.

I.

Peters Township School District ("the School District") purchased insurance for all its properties from The Hartford Accident and Indemnity Company ("Hartford"). The policy contained the following language of exclusion, which became the crux of this dispute:

This policy does not insure under this form against:

D) Loss caused by, resulting from, contributed to or aggravated by any of the following:

1. earth movement, including but not limited to earthquake, landslide, mudflow, earth sinking, earth rising or shifting.

The School District's McMurray Middle School was built over a portion of a coal mine known as Montour No. 4, which is owned and operated by Consolidation Coal Company. In May, 1984, the School District first noticed cracks in the school building which was subsequently closed for student occupancy. The parties agreed that the damage was caused by mine subsidence, or the earth under the school moving in a downward sinking and shifting fashion into the mine voids.

The District's Elm Grove School was also built above the Montour No. 4 mine, and damage to that school occurred in January, 1985. The cause of the damage at the Elm Grove School is disputed.

The School District filed damage claims with Hartford, which were rejected based upon the contention that mine subsidence was an excluded loss under the exclusion noted above. The School District then brought suit in the Court of Common Pleas of Washington County, Pennsylvania. Hartford removed the case ...


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