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Advertir Inc. v. Peerless Indemnity Insurance Co.

United States District Court, Third Circuit

August 29, 2013

ADVERTIR INC., Plaintiff,

Memorandum Opinion


In September 2011, following heavy rainfall from tropical storms Lee and Irene, Plaintiff's warehouse in Bensalem, Pennsylvania, suffered water damage when water entered the warehouse through its loading dock doors. Defendant, Peerless Indemnity Insurance Company ("Peerless"), provided property insurance for the property but denied coverage under the policy's exclusion for damage caused by flood and surface water. Plaintiff claims that Peerless' denial of coverage was improper, and that the damage is covered by the policy's endorsement for damage caused by water that "enters into and overflows from within a sump pump, sump pump well or other type of system designed to remove subsurface water which is drained from the foundation area." (Customer Protection Endorsement, Def. Mot. Ex. B, pp. ADVE000100-ADVE000108, ¶ 15(i).)

Presently before the court are the parties' cross-motions for summary judgment. For the reasons that follow, we conclude that the evidence unequivocally shows that the damage was caused by surface water that does not fall within the coverage endorsement relied upon by Plaintiff. Accordingly, Defendant's motion will be granted and Plaintiff's motion denied.

I. Factual and Procedural History

Plaintiff, Advertir, Inc. ("Advertir"), owns a warehouse in Bensalem, Pennsylvania. The property has three loading bays: Two are located at the front of the building, and a third is located on the side. In front of each loading bay, a concrete slab slopes downward toward the base of the building, where a small concrete wall separates the bottom of the loading dock and the bay door. The loading bay doors are even with the floor of the warehouse, so that a truck can pull into the bay with the bed of the truck even with the warehouse floor to make it easier to load and unload the trucks. A photograph of the loading docks is attached to this Opinion as Exhibit 1. (Pl.'s Resp., Doc. No. 16, Ex. C.)

Each loading bay has a sump pump close to where the declined concrete slab meets the concrete wall of the warehouse. These industrial sump pumps remove water from the loading bays and discharge it away from the building. According to Plaintiff, the discharge pipes attached to the sump pumps are equipped with "check valves" that prevent water from flowing back through the pump and returning to the loading bay. (Greer Aff., Pl.'s Resp. Ex. C, ¶ 11(e).)

On September 7, 2011, heavy rain fell on Bensalem. Despite the presence of the sump pumps, at least one of the loading bays outside of the warehouse filled with water, which then entered the warehouse through the bay doors. Neither party pointed to any evidence reflecting that the sump pumps malfunctioned. Rather, as described by defense expert and structural engineer, David R. Daniels, P.E., rain and local flooding "caused surface water to enter and fill the sump pits faster than the sump pumps" could discharge the water, "resulting in additional surface water filling the loading dock ramps to a level which would have then entered the building." (Daniels Rpt., Def. Mot. Ex. F, p. 12.) According to Daniels, "[t]his additional surface water would not have traveled through the sump pit or sump pump before entering the building." (Id.)

Plaintiff disagrees with certain aspects of Daniels' Report, including how many loading bays flooded, the capacity of the sump pumps and whether they were equipped with check valves. (Greer Aff., ¶ 11.) Importantly, Plaintiff does not contest Daniels' principal conclusion, which is that the capacity of the pumps was simply insufficient to handle the heavy rainfall, resulting in the loading bays gradually filling with surface water until such water entered the warehouse through the bay doors. ( Id., ¶¶ 10-11.)

The policy at issue contains a general exclusion from coverage for damage caused by surface water:

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 ...

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