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T.H.E. Insurance Co. v. Charles Boyer Children's Trust

October 11, 2006


The opinion of the court was delivered by: Chief Judge Vanaskie


Plaintiff T.H.E. Insurance Company ("TIC") seeks a declaratory judgment that the insurance policy it issued to Defendant Charles Boyer Children's Trust D/B/A Boyer's Westwood Lanes does not cover the mud and water damage to its bowling alley following a heavy rainstorm. TIC contends that it is not obligated to cover the loss by reason of the policy's earth movement and water exclusions.

Presently before the Court are the motion for summary judgment filed by TIC and the motion for partial summary judgment filed by Defendant. (Dkt. Entries 21, 24.) Because the damage at issue in this case is excluded by the surface water exclusion, TIC's motion for summary judgment will be granted, and the motion for summary judgment of Defendant will be denied.


Defendant owns a bowling alley in Pottsville, Pennsylvania. (Def.'s Statement of Material Facts ("SMF"), Dkt. Entry 26, ¶ 2.) During the night of July 11, 2004, a heavy rainstorm struck the Pottsville area. (Id., at ¶ 1.) In the early hours of July 12, 2004, Defendant's bowling alley suffered substantial damage from mud and water that flowed in when a door on the east side of the property collapsed. (Id., at ¶ 2.) Evidence of water and mud was measured at 42 inches above the floor inside the building, and 51 inches above the ground surface outside the building. (NFC Report, Dkt. Entry 22, Ex. C, at 4.) Though the actual amount is in dispute, Defendant estimates the damage to be approximately $2,000,000. (Pl.'s Response to Def.'s SMF ("Pl.'s Response"), Dkt. Entry 28, at ¶ 3.)

At some point during the night of July 11-12, 2004, the embankment to the south of the bowling alley collapsed, leaving an open hole approximately 12 feet in width and 30 feet in length. The collapse was caused by the failure of a 36-inch corrugated metal sewer pipe buried in the embankment. The sewer pipe ruptured at the collar of its joints. Defendant asserts that the pipe ruptured because the metal bands that connected the pipe's joints were loosely fitted, while Plaintiff contends that the pipe was running over capacity. (NFC Report, Dkt. Entry 22, Ex. C, at 6-9; Quad3 Report, Dkt. Entry 22, Ex. E, at 5.)

Water from the ruptured pipe weakened the earth material of the embankment, resulting in the collapse of the embankment. The collapse deposited earth material at the foot of the embankment, creating a mud pile by the concrete wall that separated the bowling alley and the embankment. This accumulation of debris diverted the normal flow of water established for drainage purposes. The water instead flowed towards a low area on the east side of the building, where the water rose to an estimated height of 51 inches.

TIC contends that surface water from the east parking lot and from the grassed area between the building and the parking lot also contributed to the flooding of the low area on the east side. (NFC Report, Dkt. Entry 22, Ex. C, at 9.) Defendant in turn asserts that the only surface water that contributed to the damage would have come from the low area and its surrounding areas, and that surface water from the parking lot did not significantly contribute to the loss. (Quad3 Report, Dkt. Entry 22, Ex. E, at 5.) Both sides agree, however, that the pressure of accumulated water and mud ultimately forced open the door on the east side of the building.

Defendant had a Commercial Lines insurance policy with TIC (the "Policy") that insured the bowling alley's building, personal property and business income. (Compl. for Declaratory J., Dkt. Entry 1, at ¶¶ 5,7.) Defendant's policy essentially was an all-risk policy, providing coverage for all risks of loss unless specifically excluded. (Def.'s SMF, Dkt. Entry 26, at ¶ 7; Oral Argument Tr., Dkt. Entry 32, at 5-6.)

Defendant filed a claim with TIC under the Policy for the loss to the bowling alley. (Def.'s SMF, Dkt. Entry 26, at ¶ 6.) Defendant asserted that the damage to the property was covered by the Policy's provisions concerning "collapse," which is defined in the Policy to mean "an abrupt falling down or caving in of a building or any part of a building . . . ." (Policy, Dkt. Entry 22, Ex. A, at 34.) Defendant argued that the damage to the bowling alley was caused by the caving in, i.e., collapse, of the door.

TIC rejected coverage on this basis because the Policy affords coverage only if the collapse was due to specifically identified causes, and the door was not knocked down by any of the enumerated causes. TIC also denied the claim on the ground that the damage to Defendant's bowling alley was caused, at least in part, by "earth movement" or "water" within the meaning of the Policy exclusions. (Pl.'s Response, Dkt. Entry 28, at ¶ 20.)

Relative to damage caused by earth movement and water, the Policy provides: 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.

b. Earth Movement

(2) Landslide, including any earth sinking, rising or shifting related to such event. . . .

(4) Earth sinking (other than sinkhole collapse), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil and the action of water under the ground surface.

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 mud flow;

(3) Water that backs up or overflows from a sewer, drain or sump . . .

(Policy, Dkt. Entry 22, Ex. A, at 29-30; emphasis added.)

On July 27, 2004, TIC filed a Complaint for Declaratory Judgment.(Dkt. Entry 1.) An Amended Complaint was filed on September 28, 2004. (Dkt. Entry 9.) Defendant filed an Answer with Counterclaim, asserting (a) entitlement to coverage; (b) bad faith liability under 42 Pa. C.S.A. §8371; and (c) fraud. (Dkt. Entry 10.) On August 25, 2005, following completion of discovery, TIC filed a Motion for Summary Judgment. (Dkt. Entry 21.) On September 7, 2005, Defendant filed a Cross Motion for Partial Summary Judgment. (Dkt. Entry 24.) The Court heard oral argument on the dispositive motions on February 10, 2006.


A. Summary Judgment Standard

Summary judgment should be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). A fact is "material" if proof of its existence or nonexistence might affect the outcome of the suit under applicable law. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986). "Facts that could alter the outcome are material facts." Charlton v. Paramus Bd. of Educ., 25 F.3d 194, 197 (3d Cir. 1994). "Summary judgment will not lie if the dispute ...

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