Hold your nose
Accessories, Ltd., which was owned by Jacob and Lisa Zukoff, was located at the corner of 1st Street and Washington Avenue in Moundsville, West Virginia. On January 7, 2017, the sewer flooded the Accessories, Ltd., premises. On that day, at around noon, J.R. Logsdon, an employee of the Moundsville Sanitary Board, was informed that a local resident heard gurgling sounds in her basement, which was indicative of a clog in the sewer system. He drove to a location near the corner of 2nd Street and Washington Avenue, where there had been known sewage clogs in the past, and attempted to clear the sewer line. To do so, Logsdon inserted a hose into the sewer line that injected water into the line in an attempt to clean it out. After the hose was deployed, the sewer level returned to normal and Logsdon left the area.
Approximately ten minutes later, Logsdon was again contacted and told that sewage was coming out of the cleanouts directly in front of Accessories, Ltd. He immediately drove by that location and observed sewage shooting “a couple of feet” into the air from a cleanout near Accessories, Ltd. To attempt to clear the clog, Logsdon returned to his prior location near the corner of 2nd Street and Washington Avenue and once again inserted the hose and injected water into the sewer line. This time his efforts were futile, and he was unable to open the line.
Realizing this was not a simple problem, Logsdon contacted his supervisor, Tim Minor, assistant superintendent for the sanitary board, and moved to a down-line location near 1st Street and Washington Avenue. When Minor arrived, Logsdon discovered a blockage in the sewer line at a manhole. Minor then used a hoist to lower Logsdon into the manhole where he attempted to use the hose to open the sewer line. Logsdon was unsuccessful in this attempt. Looking into the line, Logsdon observed crushed terracotta pipe blocking the flow. Using his hands, Logsdon reached into the line and pulled pieces of the terracotta pipe out, which unclogged the line and caused the trapped liquids to hit Logsdon in the stomach.
By the time Logsdon was able to unclog the sewer line, the damage to Accessories, Ltd.’s, building had been done. With nowhere to go, the blockage caused sewage to flood into the building that housed Accessories, Ltd., causing damage. The Zukoffs were insured under a commercial general liability policy issued by Motorists Mutual Insurance Company. The policy provided:
BUILDING AND PERSONAL PROPERTY COVERAGE FORM
We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.
CAUSES OF LOSS – SPECIAL FORM
A. COVERED CAUSES OF LOSS
Covered Causes of Loss means RISKS OF DIRECT PHYSICAL LOSS unless the loss is:
1. Excluded in Section B., Exclusions; or
2. Limited in Section C., Limitations; that follow.
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.
(3) Water that backs up or overflows from a sewer, drain or sump[.]
Jacob Zukoff sought coverage from Motorists Mutual for the damage to the Accessories, Ltd., premises. The insurer denied coverage, citing the water exclusion. The Zukoffs brought a declaratory judgment action to ascertain the rights of the parties under the policy.
Both parties filed motions for summary judgment. On July 19, 2019, the circuit court denied Motorists Mutual’s motion and granted the Zukoffs’ motion, reasoning that the policy did not define the term “backup,” rendering the policy language ambiguous. The court determined that it would not be reasonable to expect coverage if the source of the water and sewage was on the insured’s premises. Conversely, the court found that it would be reasonable to expect coverage if the source was outside the premises and “used the insured’s sewer connection as a conduit to enter the insured’s property.” Accordingly, the court found that the exclusion was inapplicable. Motorists Mutual appealed.
On appeal, the court found that the exclusion was clear and unambiguous. The court also noted that the circuit court did not acknowledge that the policy language provided for exclusions in two separate instances—“water that backs up or overflows from a sewer, drain or pump.” Because the policy must be read as a whole, the events that caused sewage to flow into the Accessories, Ltd., premises fell squarely within the unambiguous exclusion.
The circuit court’s analysis should not have ended merely with a determination of whether or not the policy term “backs up” was ambiguous. The appellate court said its prior holdings required that the circuit court examine and construe all parts of the policy together. Applying the proper analysis, it was clear that the exclusion applied not only to water that “backs up” but also to water that “overflows.”
The appellate court reversed the circuit court’s grant of the Zukoffs’ motion for summary judgment and entered judgment in favor of Motorists Mutual.
Motorists Mutual Insurance Company v. Zukoff—Supreme Court of Appeals of West Virginia—November 12, 2020—No. 19-0711.