Slip-sliding away: Rock slide claim denied
Dmitri and Mary Chaber owned property in St. Albans, West Virginia. One of five commercial rental units on that property was leased to a motorcycle shop. On February 19, 2014, soil and rock slid down a hill located to the rear of the property and damaged the motorcycle shop. The Chabers submitted a claim for property damage to their insurer, Erie Insurance Property and Casualty Company. Stephen Myers, an adjuster for Erie, examined the damage and observed that a mass of rock and soil had fallen down the steep slope behind the property. Myers met with Dmitri Chaber and discussed the policy’s exclusion of coverage for damage caused by a landslide. The policy contained the following language:
- Coverages 1, 2, 3, 4, and 5
We do not cover under Building(s)—Coverage 1; Business Personal Property and Personal Property of Others—Coverage 2; Additional Income Protection—Coverage 3; Glass and Lettering—Coverage 4; and Signs, Lights, and Clocks—Coverage 5 “loss” or damage caused directly or indirectly by any of the following. Such “loss” or damage is excluded regardless of any cause or event that contributes concurrently or in any sequence to the “loss”:
- Earth Movement
- Earthquake, including tremors and aftershocks, and any earth sinking, rising, or shifting related to such event;
- Landslide, including any earth sinking, rising, or shifting related to such event;
- Mine subsidence, meaning subsidence of a manmade mine, whether or not mining activity has ceased; or
- Earth sinking (other than sinkhole collapse), rising, or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations, or other parts of realty. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil, and the action of water under the ground surface.
This exclusion applies regardless of whether any of the above, in Paragraphs 5.a. through 5.d., is caused by an act of nature or is otherwise caused.
But if Earth Movement, as described in 5.a. through 5.d. above, results in fire, explosion, sprinkler leakage, volcanic action, or building glass breakage, we will pay for the “loss” or damage caused by such perils.
By letter dated March 24, 2014, Erie denied coverage based on its conclusion that the Chabers’ loss was not covered because of the policy’s earth movement exclusion.
On June 16, 2014, the Chabers filed a complaint against Erie and Myers, asserting: (1) breach of contract, breach of covenants of good faith and fair dealing, and violations of the West Virginia Unfair Trade Practices Act by Erie and Myers; (2) fraud and/or fraudulent misrepresentation by Myers; and (3) declaratory judgment as to whether coverage existed. By order dated April 21, 2015, the court bifurcated the action and stayed all discovery unrelated to the declaratory judgment claim.
On September 15, 2015, Erie and Myers filed a motion for partial summary judgment on the declaratory judgment portion of the claims. By order dated January 12, 2016, the court denied the motion, reasoning that genuine issues of material fact existed regarding the cause of the Chabers’ damages and whether such cause was manmade, natural, or a combination of both. The court further found genuine issues of material fact “as to whether or not there is insurance coverage for the damages claimed …”
The court entered a February 1, 2016, order granting declaratory judgment to the Chabers. The court found that coverage existed under the policy based on evidence of earth movement caused by both natural and man-made events, specifically an improperly excavated hillside. The court further found that the policy did not unambiguously exclude damage caused by rockfall caused by man-made events and that the policyholders could reasonably expect coverage for the earth movement in question. Erie and Myers appealed.
On appeal, Erie and Myers argued that the earth movement exclusion clearly and unambiguously excluded coverage for all earth movement, regardless of whether such movement was caused by an act of nature or was otherwise caused, quoting the pivotal policy language: “This exclusion applies regardless of whether any of the above … is caused by an act of nature or is otherwise caused.”
The court held that the relevant policy language was clear and unambiguous and reversed the lower court’s decision on that issue. Having so found, the court stated that the Chabers’ assertions regarding efficient proximate cause, the anti-concurrent causation clause, and reasonable expectations were inconsequential.
Erie and Myers contended that the lower court erred in finding the ensuing loss provision ambiguous and in construing it to provide coverage for the entire loss rather than the portion of the loss caused by glass breakage. The appellate court found the lower court’s interpretation of the provision to be unjustifiable, holding that the plain and unambiguous terms of the ensuing loss provision provided a narrow exception to the earth movement exclusion and permitted coverage for the portion of the loss caused by glass breakage. The other damage caused by the earth movement was not covered.
The court reversed the declaratory judgment granted to the Chabers by the lower court and remanded the action with instructions to enter declaratory judgment for Erie and Myers on the relevant part of the complaint.
Erie Insurance Property and Casualty Company and Stephen Myers vs. Dmitri Chaber and Mary Chaber-Supreme Court of Appeals of West Virginia-June 1, 2017-No. 16-0490.