INSURANCE LAW

Policy Terms • “Earth Movement Exclusion” • Water Damage Exclusion • Summary Judgment

Forester v. Allstate Ins. Co., PICS Case No. 14-0319 (M.D. Pa. Feb. 11, 2014) Kane, J. (13 pages).

Court denied summary judgment based on “earth movement exception” of homeowner’s policy where it was unclear whether terms applied to natural or accidental occurrences, but granted summary judgment under the policy’s water damage exclusion where it was undisputed that plaintiffs’ damages were caused by water. Motion for summary judgment sufficiently complied with local rule. Summary judgment granted.

Plaintiffs’ property was insured by a homeowner policy provided by defendant. The policy excluded from coverage water and earth movement damages. Plaintiffs heard a loud explosion and their power went out. Portions of the foundation wall in the basement had imploded, collapsed or cracked, causing water and mud to pour into the basement. Defendant denied plaintiffs’ claim for coverage.

Plaintiffs filed a complaint in the court of common pleas, alleging breach of contract. Defendant removed the action to federal court, and following discovery, moved for summary judgment. Plaintiff moved to strike the motion for failure to conform to Local Rule 56.1.

The district court granted defendant partial summary judgment and denied plaintiff’s motion to strike.

Local Rule 56.1 requires, in part, that a motion for summary judgment be accompanied by a separate, short and concise statement of the material facts, in numbered paragraphs, as to which the moving party contends there is no genuine issue to be tried. Although defendant’s motion for summary judgment included a section entitled “Statement of Material Facts,” which included short and concise statements of fact with corresponding citations of the record, plaintiff complained that it was not filed separately, as required by L.R. 56.1.

Although defendant’s submitted statement was not filed separately from its motion, it was nevertheless clearly identified as a statement of material facts, and contained a list of material facts with appropriate citation of the record such that the court could clearly understand its purpose and substance. Thus, plaintiff’s motion to strike was denied.

Defendant moved for summary judgment, asserting that there was no breach of contract because the policy’s earth movement and water exclusions preclude coverage. Plaintiff asserted that summary judgment was inappropriate because there is a genuine dispute as to whether the cause of damages was an accidental occurrence, as plaintiff claimed, or a natural occurrence, as defendant claimed.

Defendant’s earth movement provision excluded losses ” . . . consisting of or caused by . . . earth movement of any type.” Under Pennsylvania law, earth movement exclusions which are ambiguous as to whether they cover both natural and non-natural occurrences should be interpreted to exclude coverage for natural occurrences only. As used in the policy, “ earth movement of any type,” could be read to exclude both natural and non-natural occurrences although the phrase remains vague. These clauses have generally been found ambiguous under Pennsylvania law. Because the parties disputed whether the incident was natural or accidental, defendant’s motion for summary judgment based on the earth movement clause is denied.

However, defendant was entitled to summary judgment under the policy’s water damage exclusion because it was undisputed that plaintiff’s loss was caused by water, to which the policy exclusion clearly applied.