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Respondents, Dimitri Chaber and his wife, Mary, owned a building in Charleston located near a hillside. The hillside was excavated before Respondents purchased the building in 1981. Respondents’ building suffered significant damage in February, 2014 when rocks fell from the hillside. Respondents submitted a claim to Petitioner, Erie, which provided coverage for the building. Petitioner denied the claim, citing language excluding coverage for “landslides, including any earth sinking, rising, or shifting relating to such event.” The policy also stated that coverage was excluded “regardless of whether any of the above…is caused by an act of nature or is otherwise caused.”
Petitioner retained an engineer to conduct an examination and render an opinion regarding causation. The engineer orally stated that improper excavation of the hillside was at least partly to blame for the rock fall. Respondents also retained an engineer who testified that the hillside was inappropriately excavated, leading to the rock fall. Respondents sued for breach of contract, bad faith and fraud. Their complaint also sought a declaratory judgment regarding coverage.
In its opinion, the trial court concluded that a “naturally occurring rock fall is included within the common definition of landslide.” Murray v. State Farm Fire and Casualty Co., 203 W.Va. 477, 309 S.E.2d 1 (1998). Where, however, the exclusion contains terms that are not otherwise defined, and those terms relate to natural events, Murray says that the exclusion must be limited to “naturally occurring events rather than man-made events.” In this particular case, the trial court found “that the damages resulted from a man-made cause, i.e., negligent or improper excavation.” Accordingly, under Murray, it found that the exclusion was inapplicable. Therefore, the policy provided coverage for Respondents’ losses. Petitioner appealed.
Whether an exclusion for earth movement applied where a rockfall was caused both naturally and by man-made events?
The Supreme Court reversed, finding that Murray was inapplicable because it dealt with “markedly different” policy language. The policy in Murray excluded coverage where a landslide arose from “natural or external forces, or … as a result of any combination of these.” Murray found the word “external” to be ambiguous.
In this case, however, Petitioner’s policy did not contain the Murray language. Instead, it excluded coverage in any situation where the landslide was “caused by an act of a nature or is otherwise caused”– eliminating the word “external” entirely. Citing cases from Pennsylvania, New York and elsewhere, the Supreme Court found this language to be clear and unambiguous. Thus, whether the landslide that damaged Respondent’s property “was triggered by natural forces or by improper excavation of the hillside at the rear of the property, the exclusion applies.”
The Supreme Court also briefly addressed a few of the remaining issues raised by the parties.
First, the Court found that the anti-concurrent causation clause was inapplicable. Specifically, the policy provided that any excluded loss would remain excluded “regardless of any cause or event that contributes concurrently or in any sequence to the loss.” The Court noted that the clause only came into play “where there is both and an excluded loss…Whether caused by nature or otherwise caused by an improperly excavated hillside, the loss [here] is excluded, and application of the anti-concurrent causation clause is unnecessary.”
In addition, the Court examined the policy’s ensuing loss language. In the event of a landslide that “results in fire, explosion, sprinkler leakage, volcanic action or building glass breakage, [Petitioner] will pay for the loss or damage caused by such perils.” The Court described this as a “narrow exception” to the policy’s exclusionary language. It provides coverage for the specific losses or damages listed but, importantly, it “does not revive or reinstate coverage for losses unambiguously excluded by the policy.” Thus, the policy provided coverage for glass breakage resulting from the landslide, but did not cover any of the other losses or damages that were otherwise excluded.
This opinion is a bit of a disappointment, especially in view of our long-settled case law stating that exclusions must be narrowly construed against the insurer. Standing alone, this opinion probably will not have a broad impact. However, it is likely we will continue to see a stricter, pro-insurer reading of insurance policies. Attorneys representing those making claims under insurance policies should craft their pleadings and legal arguments accordingly.