Opinion
No. A2-98-38.
April 30, 1999.
ORDER
I. INTRODUCTION
Before the court are cross motions for summary judgment (doc. #'s 13 and 15). The parties have stipulated to the following facts for purposes of the motions.
II. BACKGROUND
Briefly stated, this dispute arises out of the historic flood which devastated the Grand Forks, North Dakota-East Grand Forks, Minnesota area in the spring of 1997. Plaintiffs are various Grand Forks area business owners which purchased all-risk insurance policies from defendant prior to the flood. Each policy was in full force and effect during all times relevant.
Each plaintiff suffered property damage from flood waters which entered their premises. Each plaintiff also suffered damage from sewer backup which accompanied the flood, and submitted claims for this damage. However, defendant denied these claims pursuant to the following policy provisions:
II. COVERED CAUSES OF LOSS
RISKS OF DIRECT PHYSICAL LOSS OR DAMAGE unless the loss or damage is excluded or limited as described below:
A. 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)(a) Flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not;. . .
(d) Water that backs up or overflows from a sewer, drain or sump but only if Back-Up of Sewers and Drains is shown as "Excluded" in the Declarations.See Ex. accompanying Stipulated Facts for Purposes of Cross-Mot. for Summ. J (doc. #17). "Back-Up of Sewers Drains" was not shown as "Excluded" in the Declarations contained in the policies at issue. See id. Consequently, such damage was covered under the policies. Plaintiffs responded to the denial of coverage by bringing this action, alleging that, notwithstanding the aforementioned provisions, their policies afforded coverage for damage caused by sewer backup which occurred prior to damage resulting from flood water. To that end, plaintiffs moved this court for summary judgment (doc. #15). Defendant also filed a motion for summary judgment (doc. #13), maintaining that since plaintiffs' damages were caused directly or indirectly by flood water, the aforementioned policy provisions clearly and unambiguously excluded coverage regardless of the fact that sewer backup contributed concurrently or in any sequence to plaintiffs' damages. This court heard arguments on both motions on December 21, 1998, in Fargo, North Dakota, and took the matter under advisement thereafter.
III ANALYSIS
A. SUMMARY JUDGMENT STANDARDS
Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A fact is "material" if it might affect the outcome of a case, and a factual dispute is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Churchill Bus. Credit, Inc. v. Pacific Mut. Door Co., 49 F.3d 1334, 1336 (8th Cir. 1995).
The "basic inquiry" for purposes of summary judgment is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one sided that one party must prevail as a matter of law." Quick v. Donaldson Co., Inc., 90 F.3d 1372, 1376 (8th Cir. 1996) (citing Anderson, 477 U.S. at 251-52). Along these lines, courts in Minnesota and North Dakota view the interpretation of an insurance policy as a question of law. Dundee Mut. Ins. Co. v. Marifjeren, 587 N.W.2d 191, 193 (N.D. 1998); Landico, Inc. v. American Family Ins. Co., 559 N.W.2d 438, 440 (Minn.Ct.App. 1997). Consequently, such cases are particularly amenable to summary judgment. See John Deere Ins. Co. v. Shamrock Indus., Inc., 929 F.2d 413, 415 (8th Cir. 1991).
When construing an insurance policy, North Dakota courts seek to give effect to the mutual intent of the parties as it existed at the time the contract was formed. See Landis v. CNA Ins., 589 N.W.2d 590, 591-92 (N.D. 1999). To accomplish this aim, North Dakota courts look first to the policy language itself. Id. at 592; Marifjeren, 587 N.W.2d at 193. Where a policy term is self explanatory and subject to only one meaning, the inquiry ends.Landis, 589 N.W.2d at 592; Marifjeren, 587 N.W.2d at 193.
An ambiguity exists in an insurance policy under North Dakota law when good arguments can be made for two contrary positions regarding the meaning of a term. Marifjeren, 587 N.W.2d at 194. In these cases, North Dakota courts construe the term in favor of the insured. Id. However, North Dakota courts will not strain the definition of a term to create an ambiguity. See Close v. Ebertz, 583 N.W.2d 794, 796 (N.D. 1998).
Minnesota courts similarly guard against creating ambiguities in an insurance policy where none exist, and find a term ambiguous only if it is reasonably subject to more than one interpretation.Landico, Inc., 559 N.W.2d at 440. In order to discern the intent of the parties to an insurance contract, Minnesota courts construe the policy as a whole and accord unambiguous language its plain and ordinary meaning. Id.
B. MOTIONS FOR SUMMARY JUDGMENT
As previously mentioned, defendant denied coverage for plaintiffs' claims pursuant to what this court terms the "concurrent causation" language contained in each of the policies at issue. Defendant maintains that this language clearly and unambiguously excluded coverage for plaintiffs' claimed damages, since they were caused directly or indirectly by flood, surface water, the overflow of a body of water and/or waves. Along these lines, defendant cites Front Row Theatre, Inc. v. American Mfr. Mut. Ins. Co., 18 F.3d 1343 (6th Cir. 1994), and Pakmark Corp. v. Liberty Mut. Ins. Co., 943 S.W.2d 256 (Mo.Ct.App. 1997), together with a host of additional cases, in support of the proposition that courts routinely hold this concurrent causation language clearly and unambiguously excludes coverage where damage is caused directly or indirectly by an excluded peril, even where damage is also partially caused by a covered peril. Notwithstanding plaintiffs' admirable and creative attempts to circumvent this language, this court finds defendant's argument compelling. The concurrent causation language contained in each of the policies at issue clearly and unambiguously excluded coverage for damage caused directly or indirectly by flood, surface water, waves, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not. This exclusion applied regardless of any other cause or event that contributed concurrently or in any sequence to plaintiffs' loss. In other words, the exclusion applied regardless of the fact that sewer backup was indeed a covered peril, and regardless of the fact that sewer backup may have operated more closely in time or space than flood water in producing plaintiffs' claimed damages. In light of this clear and unambiguous policy exclusion, this court finds that defendant properly denied coverage for plaintiffs' claimed damages. Accordingly, IT IS HEREBY ORDERED that plaintiffs' motion for summary judgment (doc. #15) is DENIED, defendant's motion for summary judgment (doc. #13) is GRANTED, and plaintiffs' complaint is DISMISSED. The Clerk is directed to enter a Judgment closing this case.
IT IS SO ORDERED.
RODNEY S. WEBB, CHIEF JUDGE UNITED STATES DISTRICT COURT