Opinion
C.A. No. 04C-11-214 MJB
Submitted: June 7, 2007
Decided: August 29, 2007
Upon Defendant's Motion for Summary Judgment, GRANTED.
James F. Kipp, Esquire, Elzufon Austin Reardon Tarlov Mondell, P.A., Bear, Delaware, Attorney for Plaintiffs.
Kenneth M. Doss, Esquire, Casaring, Christman Shalk, P.A., Wilmington, Delaware, Attorney for Defendant.
OPINION AND ORDER
INTRODUCTION
This is a breach of contract action arising out of the Defendant, insurance carrier's denial of Plaintiffs' claim for loss of personal property. The Complaint was filed on November 18, 2004, alleging that Plaintiffs' condominium was damaged in a windstorm, which led to development of mold and loss of personal property as a result of exposure to the mold. On April 9, 2007, Defendant filed the instant Motion for Summary Judgment and a hearing was held on May 24, 2007. At oral argument the Court asked for additional submissions from the parties, including a letter from Plaintiff summarizing the factual information provided to the Defendant to date. Submissions were filed with the Court on June 7, 2007. For the reasons set forth herein, Defendant's Motion for Summary Judgment is GRANTED.
FACTUAL BACKGROUND
The following facts are undisputed. Plaintiffs, John and Carolyn Sullivan carried a homeowner's insurance policy issued by Defendant, Standard Fire Insurance Company ("Standard"), which included coverage for damages to a "Dwelling" as well as to "Personal Property." Sometime in July of 2000, Plaintiffs noticed some water leaking from a sprinkler head and bathroom pipes in their condominium, causing a stain on the ceiling and around one of the windows. In the beginning of 2001, Plaintiffs noticed damp carpets and stains and they heard water from leaky pipes running in the walls. Subsequently, Plaintiffs had the leaky pipes in the walls repaired.On July 20, 2001, Plaintiffs submitted a claim to Defendant for alleged damage to the condominium and to personal property within the condominium. Plaintiffs alleged the damage occurred when wind associated with rain blew shingles off the roof and caused leaks into their first floor condominium. Plaintiffs' claim did not allege that the personal property sustained water damage or other physical damage. Rather, Plaintiffs alleged the property was exposed to mold spores that developed inside the walls and insulation of the condominium as a result of the alleged roof leak. Consequently, the Defendant adjusted and paid for the damages to the condominium structure but denied coverage for the personal property on the ground that, pursuant to the insurance policy, the personal property is covered only for "direct physical loss covered under the policy" and not for the indirect loss due to spores that developed as a result of water damage. Plaintiffs subsequently filed this action for breach of contract against Defendant for denial of the claim for personal property loss.
STANDARD OF REVIEW
The standard for granting summary judgment is high. Summary judgment may be granted where the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. "In determining whether there is a genuine issue of material fact, the evidence must be viewed in a light most favorable to the non-moving party." "When taking all of the facts in a light most favorable to the non-moving party, if there remains a genuine issue of material fact requiring trial, summary judgment may not be granted." "Nor will summary judgment be granted if, upon an examination of all the facts, it seems desirable to inquire thoroughly into them in order to clarify the application of the law to the circumstance."PARTIES' CONTENTIONS
In its Motion for Summary Judgment, Defendant argues that the personal property claims are barred under the policy unless the damage was directly caused by the force of a covered peril. Defendant maintains that mold and mold spores are not named perils and thus, damage caused directly by mold is not covered under the policy. Furthermore, Defendant contends that discovery is now closed and Plaintiffs have not provided any evidence that a windstorm caused the damage leading to a loss of the personal property, that it was the direct cause of that damage, or that it was the only cause of the loss.Plaintiffs argue that Defendant's insurance adjuster has previously concluded that the peril (windstorm or hail) that is expressly listed in the policy as a covered peril did occur and determined to pay for the damages to the dwelling from that occurrence. Plaintiffs believe that determination and payment is a binding admission. The only question then, Plaintiffs argue, is whether or not there was direct physical loss to personal property as a result of the covered peril. Plaintiffs recognize that no Delaware cases have defined the term "direct physical loss" in instances where there is no tangible damage to the property, and therefore, relies on other jurisdictions' interpretations. Plaintiffs argue that the mold, to which the personal property was exposed, constitutes direct physical loss to the personal property because it made the property unusable due to health risks.
In their additional submission to the Court, Plaintiffs have listed, as requested by the Court, the factual information previously provided to the defense, including the names of experts and the subject matter of their testimony, and environmental testing reports. While these documents certainly establish the existence of mold in the condominium and even on the furniture and other personal property, nothing provided suggests that the windstorm directly caused the damage to Plaintiff's personal property.
ANALYSIS
To determine whether Plaintiffs' claims are covered under the policy, the Court must first distinguish between the policy coverage for loss or damage to the condominium structure and coverage for loss of personal property. Regarding the damage to the condominium structure, Plaintiffs claim the windstorm caused the shingles on the roof to come off, causing an opening in the roof which allowed rain to enter the home. As to the personal property, Plaintiffs claim the rain entered the home and the walls through the opening in the roof and caused mold growth over time. The mold spores, they claim, then spread through the home and damaged the personal property.
Plaintiffs' insurance policy contains two sections. Section I sets forth all "Property Coverages" and is divided into three subsections: A)Dwelling; C)Personal Property; and D)Loss of Use. Section II of the policy sets forth the "Liability Coverages." The relevant provisions for the purposes of this motion are subsections A and C of the property coverage section. While coverage under both subsections A and C are limited to damage caused by one of the specified perils, where the specified peril is a windstorm, coverage for personal property inside the building is not as broad as coverage for the building itself. The relevant contract provisions, under which plaintiffs have asserted claims provide:
We insure for direct physical loss to the property described in Coverage A [Dwelling] and C [personal property] caused only by a peril named below, unless the loss is excepted or excluded in Section I-Exclusions:
. . . Windstorm or hail. This peril does not include loss to the inside of a building or the property contained in a building caused by rain, snow, sleet, sand, or dust unless the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand, or dust enters through this opening. (Emphasis added).
That portion of this provision, dealing with the exclusion, has not been raised by either party as relevant to this matter.
For the purposes of the instant Motion for Summary Judgment the sole issue before the Court is whether any mold damage to Plaintiffs' personal property constitutes "direct physical damage" caused by a covered peril under Plaintiffs' insurance policy. Because Defendant has accepted and paid Plaintiffs' claim for loss to the condominium caused by a windstorm and because Defendant does not argue that anything other than the windstorm caused the structural damages, for the purposes of this motion, the Court assumes there is no dispute that the condominium sustained water damage as a result of the windstorm. And, while Defendant has correctly indicated in its submission that Plaintiffs have not provided any evidence to support the position that the mold was caused by the water damage that resulted from the windstorm as opposed to the earlier water damage due to the leaking pipes, for purposes of this motion, the Court will assume there is direct causation between the windstorm and the development of the mold. When the facts are viewed in a light most favorable to Plaintiffs, even assuming the mold growth resulted from the water damage in connection with the windstorm, the Court finds that the loss to personal property was not a direct physical loss and, therefore, not covered by the insurance policy.
The language of the insurance policy will determine the scope of coverage. Under Delaware law, the interpretation of contractual language, including insurance policies, is a question of law for the Court to decide. If there are ambiguities, the language of an insurance contract is to be construed against the insurance company that drafted it. A term is ambiguous when it can be assigned more than one reasonable meaning. However, a contract is not ambiguous merely because the parties do not agree upon its proper construction. Clear and unambiguous language in insurance contracts will be given its plain and ordinary meaning.
Rhone-Polenc Baxic Chems. Co. v. Am. Motorist Ins. Co., 616 A.2d 1192 (Del.Super. 1992).
Id. at 1195.
Steigler v. Ins. Co. of N. Am., 384 A.2d 398 (Del. 1978).
Carlozzi v. Fidelity Cas. Co., 2001 WL 755385 (Del.Super.).
Id.
Where insurance against property damage covers only direct loss, it has been construed to mean immediate or proximate as distinguished from remote or incidental causes. "Under a policy covering "direct loss" by, "direct physical loss" by, or loss "directly resulting" from windstorms, the quoted phrases are generally synonymous with proximate cause." "Alternatively, some courts describe the phrase "direct loss" in terms of physical damage due to the strength and force of the wind." Thus, an insured may recover under a policy insuring against direct loss by windstorm if the wind was the proximate cause of loss, even if the loss is directly caused by water which entered the property due to wind damage. In the present case, however, neither water nor wind directly caused the damage to the personal property belonging to Plaintiffs.
See e.g. Sorrentino v. Allcity Ins. Co., 229 A.D.2d 481 (N.Y.App.Div. 1996); The Travelers' Indemnity Co. v. L. Jarrett, 369 S.W.2d 653 (Tx.Ct.Civ.App. 1963); Yunker v. Republic-Franklin Ins. Co., 442 N.E.2d 108 (Oh. App. Ct. 1982).
11 Couch on Insurance 3d. § 153:13
11 Couch on Insurance 3d. § 153:13
11 Couch on Insurance 3d. § 153:16; Granchelli v. Travelers Ins. Co., 167 A.D.2d 839 (N.Y.App.Div. 1990).
"Under a policy insuring against loss by windstorm, but excluding certain types of water damage, there is no coverage when the proximate cause of the loss was not a windstorm, but an excluded water peril." Specifically, regarding mold damage, some cases have found that where mold was not a covered peril, but was caused by a covered peril, the loss to personal property caused by the mold was not covered by the policy, but the cost of getting rid of the mold itself was covered.
11 Couch on Insurance 3d. § 153:18; Newark Trust Co. v. Agricultural Ins. Co., 237 F. 788 (3d. Cir. 1916); Steve's Pier One, Inc. v. Insurance Co. of N. Am., 131 A.D.2d 834 (N.Y.App.Div. 1987).
See Simonetti v. Selective Insurance, 859 A.2d 694 (N.J.Super.Ct. 2004).
In Carlozzi v. Fidelity Cas. Co., where, as here, causation was at issue, the Court placed the burden on the plaintiff to establish causation with three distinct aspects: 1) the covered peril must have causally contributed to the loss; 2) the peril must be a direct cause of the loss; and 3) the peril must be the only cause of the loss. In Carlozzi, plaintiffs sought a declaratory judgment against their home owner's insurance policy for coverage of certain structural damages to their home. One year after moving to their home Plaintiffs noticed problems with the construction. They noticed hairline cracks which grew larger over time. They also noticed swampy grass adjacent to the home. Plaintiffs filed an initial claim under an assumption that a spring located under the home was causing the crack. That claim was denied. After further investigation, plaintiffs learned that there was a plumbing problem. They discovered that the drain pipe leading away from the bathtub in their problematic bathroom looked as if it had rotted away. They filed another claim describing the problem as "water damage." That claim was denied after the insurer's investigator opined that the cracking and the damage were caused by general settlement. The investigator concluded the leak from the bath tub drainage pipe could not have caused this extensive damage. Plaintiff's investigator, however, concluded that the saturation of the floor with water from the corroded pipes caused the foundation to settle and crack over a long period of time. The policy stated that all "loss caused directly or indirectly by either settlement of the foundation or rust and corrosion is excluded." Even though the Court determined that all damage was, at least, indirectly caused by a corroded drainpipe, the Court there held that the damage was not "caused" by the water that escaped from the drainpipe, rather, it was "caused" by the settlement, which was expressly excluded from the covered perils in the policy. As such, the Court held the plaintiffs were not entitled to benefits.
2001 WL 755385 (Del.Super.).
While Plaintiff has not submitted any expert testimony supporting its position that the windstorm related water damage was the only cause contributing to the mold, for the purposes of this motion the Court assumes it was the only cause.
While Delaware Courts have not interpreted the "direct physical loss" language presently at issue, Plaintiff directs the Court to cases from other jurisdictions where such language has been construed. Having reviewed the cased cited by Plaintiffs, the Court does not find them helpful. Not only did the language in the applicable contracts differ in those cases, but those cases involved loss to the insured's real property, not personal property.
See, Western Fire Ins. Co. v. First Presbyterian Church, 437 P.2d 52 (Colo.Sup.Ct. 1968) (held the loss of use of a church as a result of an accumulation of gasoline around and under the building which made the premises uninhabitable, was direct physical loss within the coverage of the policy.); Sentinel Management Co. v. New Hampshire Ins. Co., 563 N.W.2d 296 (Minn.App. 1997) (held the asbestos contamination of an apartment building was a direct physical loss under an all risk policy even though the asbestos contamination did not result in tangible injury to the physical structure of the building itself.); Farmers Ins. Co. v. Trutanich, 858 P.2d 1332 (Or.Ct.App. 1993) (held the loss caused by odor from a sub-tenant's illegal methamphetamine operation was a direct physical loss because it damaged the house.).
Applying well-settled principles of contract construction, the Court finds the relevant provisions of the contract are unambiguous and will, therefore, be given their ordinary and usual meaning. Under this standard of construction, the Court finds no evidence that Plaintiffs' personal property sustained direct physical loss.
CONCLUSION
Based on the foregoing, the Court finds Plaintiffs' personal property damages were not caused by a peril covered by the insurance policy. Accordingly, Defendant's Motion for Summary Judgment is GRANTED.
IT IS SO ORDERED.
M. Jane Brady Superior Court Judge