Appeal from the Judgment Entered October 5, 2012 In the Court of Common Pleas of Philadelphia County Civil Division at No(s): No. 002909 Aug. Term 2012
BEFORE: STEVENS, P.J., OLSON, J., and STRASSBURGER, J. [*]
Lititz Mutual Insurance Company ("Lititz") appeals from the judgment entered by the Court of Common Pleas of Philadelphia County in favor of Elaine McEwing in the amount of $30, 000.00. Lititz claims the trial court erred in entering judgment in McEwing's favor as she was not entitled to coverage under her Homeowner's Insurance Policy that contained an applicable exclusion for damage caused by groundwater. Lititz also claims the trial court erred in refusing to strike the testimony of McEwing's expert witnesses. We remand for the trial court to correct its clerical error in the judgment amount but affirm the judgment in all other respects.
McEwing's three bedroom, ranch-style home in Bristol, Pennsylvania, has been insured by Lititz since 1995 under a named perils coverage policy. On or about December 17, 2009, McEwing's home sustained damage due to the deterioration of its supporting floor joists. As a result of this damage, the floor of the home dropped three to four inches into the crawlspace beneath the home. The walls in McEwing's living room, hallway, and bathroom separated from the floor and the ceiling. As McEwing's late husband, Joseph McEwing, had been diagnosed with terminal cancer and passed away shortly after the McEwings discovered the damage to their home, McEwing relied on the assistance of her son-in-law, Mark Reardon, to help her file the claim with Lititz.
Reardon contacted public adjuster Walter Clark to assist McEwing in writing the insurance claim. Clark arranged to meet Reardon at McEwing's home in January 2010 to better assess the damages. Both Reardon and Clark crawled underneath the house on their stomachs to inspect the crawlspace, which has cinder block foundation walls. The distance from the cement floor to the subfloor of the home was twenty-four inches. Both men noted the home's wooden joists were rotted where they connected at the main support beam and into the sill plates. Neither Clark nor Reardon saw any standing water in the crawlspace. Clark noted he did not observe any deterioration in the block walls.
Clark submitted McEwing's claim to Lititz on January 18, 2010. While awaiting Lititz's resolution of her claim, McEwing arranged for Reardon to make temporary repairs to the joists until more permanent repairs could be properly made with insurance proceeds. McEwing purchased the materials for the repairs and Reardon replaced the broken joists and strengthened the existing joists by sistering them to new joists. McEwing stayed at Reardon's home for two months while the repairs were being completed.
Lititz retained an independent adjuster, Francis Beck, to assess the damages to McEwing's home. Clark met with Beck and showed him the damage to the interior of the home. Beck did not enter the crawlspace, but determined that it was necessary to have an engineer inspect the property. Beck retained the services of engineer G.P. Lamina, Jr., P.E., who initially came to assess the damage to McEwing's home on January 27, 2010, but rescheduled his inspection. Lamina returned to inspect the property on January 29, 2010 and instructed his associate to go into the crawlspace, take pictures, and measure moisture levels.
Thereafter, Lamina issued a report in which he made specific findings that the wood floor joists dropped into the crawl space, causing the living room and bedroom floors to fail and the walls and ceiling to separate. Lamina noted that the crawlspace floor was wet and the cinderblock walls were moist with dark water marks. The report contains Lamina's measurements for the moisture content of the main beam and the supporting joints. Based on his findings, Lamina opined that the floor joists failed as a result of water damage. Lamina reasoned that water had permeated the concrete masonry units (CMU or cinder blocks) and reached the joists "which lost their shear and flexural strength to withstand the imposed live and dead loads and eventually caused the structural wood members to fail." Report, 2/17/10, at 2.
On March 18, 2010, Lou Tshudy, Senior Claim Examiner at Lititz, sent correspondence to notify McEwing that her insurance policy contained an exclusion for damage caused by groundwater. Ms. Tshudy cited Lamina's expert report and referred McEwing to the following language in the insurance policy:
SECTION 1 - EXCLUSIONS
1. 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.
c. Water damage, meaning:
(1) Flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by the wind;
(2) Water which backs up through sewers or drains or which overflows from a sump; or
(3) Water below the surface of the ground, including water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool, or other structure.
Lititz Insurance Policy ("Policy"), Form HO00030491, at 8-9 (emphasis added). Tshudy did not cite any other reason for denying McEwing coverage for the damage to her home besides the groundwater exclusion.
Walter Clark, McEwing's public adjuster, challenged this denial of coverage in several letters directed to Tshudy. Clark first cited the language in an extended coverage endorsement to the policy which provided "Limited Fungi, Wet or Dry Rot, or Bacteria Coverage." Endorsement, Form HO04320502. Although Lititz generally would not insure for loss caused by "constant or repeated seepage or leakage of water or the presence of condensation of humidity, moisture, or vapor, over a period of weeks, months or years, " such loss would be covered under the endorsement if the "seepage or leakage of water or the presence or condensation of humidity, moisture, or vapor and the resulting damage is unknown to all 'insureds' and is hidden within the walls or ceilings or beneath the floors or above the ceilings of a structure." Endorsement, Form HO04320502, at 2. As McEwing and her late husband were elderly when the damage occurred and Mr. McEwing had recently lost his battle with terminal cancer, Clark asserted that there was no way the McEwings could have known about the humid conditions and resulting damage in their crawlspace.
In addition to the endorsement, Clark claimed the damages to McEwing's home were covered under the Additional Coverages subsection of the original policy in which Lititz agreed to "insure for direct physical loss to covered property involving collapse of a building or any part of a building caused only by ... hidden decay." Policy, Form HO00030491, at 5 (emphasis added). In response to Clark's letters, Tshudy did not challenge his assertions that McEwing would be eligible for coverage under the limited rot endorsement or the collapse provision, but essentially found these issues irrelevant as the groundwater exclusion would apply in all cases. Tshudy cited the language of the exclusion which states that any loss caused by surface water and/or water ...