2011-693, The Barking Dog, Ltd. v. Citizens Insurance Company of America

In this declaratory judgment proceeding, the defendant,

brief and orally), for the defendant. ___________________________ Robinson & Cole LLP on the THE SUPREME COURT OF NEW HAMPSHIRE

Gormley on the brief and orally), for the plaintiff.

to press. Errors may be reported by E-mail at the following address:

editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as p. 2 (c) Doors, windows or other openings.

(b) Basements, whether paved or not; or

(a) Foundations, walls, floors or paved surfaces;

seeping through:

Water under the ground surface pressing on, or flowing or

or

Water that backs up or overflows from a sewer, drain or sump;

exclusions,” which exclude coverage for damage caused by:

grants.” The BFWD provision first deletes two of the policy’s so-called “water provided under the [policy] through new coverages and broader coverage through a “Special Broadening Endorsement” that “amend[ed] coverage

“Broad Form Water Damage” (BFWD) provision, which was added to the policy

The plaintiff argued that it is entitled to coverage under the policy’s

other materials to enter the chamber itself and cause its failure.”

risers surrounding the pump chamber to move, thereby allowing water and

snow, created such a serious groundwater condition so as to cause the cement

amount of rainfall on the day in question coupled with the existing melting of adopted the plaintiff’s expert’s theory that “the significant and highly unusual were 180 degrees apart in their assessment of this loss.” Ultimately, the court

conclusions were quite similar” and “[t]his is not a case where the two experts

precise cause of the pump failure. The trial court noted that “their general pump portion of the system. Both parties retained experts to determine the It is undisputed that the septic system failed due to the failure of the excluded from coverage. The plaintiff’s specific argument is that it is entitled to

exclusions. Thus, absent the BFWD provision, such damage would be policy, coverage for damage described in language identical to those water The BFWD provision then adds, to the “Additional Coverages” section of the

superior court for a declaration that it is entitled to coverage. on certain policy exclusions. On June 23, 2010, the plaintiff petitioned the The plaintiff made a claim under the policy, but the defendant denied it, relying

after a heavy rainfall, the septic system at the plaintiff’s Derry facility failed.

The following facts are derived from the record. On February 25, 2010,

error. We affirm.

plaintiff’s expert to testify at trial. The defendant argues that both rulings were to disclose its expert’s curriculum vitae and, accordingly, permitted the insurance policy, the burden of proof is on the insurer. Carter v. Concord Gen. p. 3 In a declaratory judgment proceeding to determine the coverage of an

water or earth movement exclusions. defendant responded that the special endorsement did not alter or modify these the BFWD provision added by the special endorsement supersedes them. The

The plaintiff argued, however, that these exclusions are inapplicable because

surface. improperly compacted soil and the action of water under the ground

conditions include contraction, expansion, freezing, thawing, erosion,

disarrangement of foundations or other parts of realty. Soil

including soil conditions which cause settling, cracking or other

which is a question of law that we review de Earth sinking (other than sinkhole collapse), rising or shifting Resolution of this case requires us to interpret the language of the policy, by:

or not.” The earth movement exclusion excludes coverage for damage caused waves, overflow of any body of water, or their spray, all whether driven by wind coverage for damage caused by “[f]lood, surface water, waves, tides, tidal

the policy. This appeal followed. the benefit of the policy holder,” and thus ruled that the loss is covered under free to limit its liability through an exclusion written in clear and unambiguous ambiguous.” It explained that “any ambiguity in insurance policies inures to exclusion.” The water exclusion relied upon by the defendant excludes

casual reading of the policy as a whole.” Id

statutory provision or public policy to the contrary, an insurance company is concluded that “given the cause of this loss, the policy provisions are the language its natural and ordinary meaning.” Id. at 320. “Absent a unaffected by the BFWD provision, as well as by an “earth movement construed objectively; where the terms are clear and unambiguous, we accord at issue is barred by another of the policy’s water exclusions that was. at 319-20. “Policy terms are Exclusions . . . apply.” Accordingly, the defendant maintained that the damage reasonable person in the position of the insured based upon a more than Co., 156 N.H. 317, 319 (2007). “We construe the language as would a

considering the experts’ testimony and the policy provisions, the court Mut. Ins. Co., 155 N.H. 515, 517 (2007); RSA 491:22-a (2010). After

which the BFWD provision was added specifically states that “[a]ll policy

for some damage that would otherwise not be covered. However, the section to The defendant acknowledged that the BFWD provision provides coverage

pump chamber] was groundwater.” coverage under the BFWD provision because “[t]he cause of the damage [to the p. 4 “natural and ordinary meaning.” Webster using these terms for such a descriptive purpose is consistent with their

understood description of the orientation of the surfaces of a box and, thus,

the sides perpendicular thereto as its walls. These terms offer a simple, easilysee no reason why one would not refer to the bottom of a box as its floor and Although “walls” and “floors” are typically associated with buildings, we

decline to adhere to such a narrow construction of these terms. applying to parts of a building, not parts of a subterranean septic system.” We chamber because both terms “can . . . only reasonably be construed as

contends that the terms “walls” and “floor” cannot be applied to the pump

the walls and floor of the pump chamber, a concrete box. The defendant

coverage – the damage was caused by “water under the ground” pressing on testimony submitted by the plaintiff, the damage falls within the scope of this through . . . [f]oundations, walls, floor[s] or paved surfaces.” Given the expert

caused by “[w]ater under the ground surface pressing on, or flowing or seeping

The BFWD provision grants, in relevant part, coverage for damage

pump to fail.

allowing groundwater and soil to infiltrate the chamber, thereby causing the

the chamber to float. In turn, concrete risers sitting atop the chamber shifted, exerted pressure on the bottom and sides of the pump chamber, which caused chamber created an uplifting pressure called “buoyancy force.” That force

day in question, and, as a result, the groundwater surrounding the pump

provision.

the pump. He explained that there were high groundwater conditions on the

the first instance, the damages at issue fall within the BFWD coverage

plaintiff’s expert testified that the pump chamber is a concrete box containing The trial court adopted the plaintiff’s expert’s damage theory. The

by the BFWD provision in the first instance.

coverage. See

against the insurer. Progressive N. Ins. Co. v. Argonaut Ins. Co.

unambiguous, two parties cannot reasonably disagree about its meaning. Id cause of the damage to determine whether it falls within the coverage granted before the exclusions to avoid confusion and error.”). We therefore examine the (“Generally, the insuring agreement of an insurance policy should be construed

S. Plitt et al., Couch on Insurance 3d § 22:2, at 22-6 (2010)

We must first determine whether the damage falls within an area of

781 (2011).

interpretation favors coverage, we construe the policy in the insured’s favor and Thus, when an insurance policy’s language is ambiguous and one reasonable

(2007). However, for exclusionary language to be considered clear and policy language.” Philbrick v. Liberty Mut. Fire Ins. Co., 156 N.H. 389, 391 p. 5 “we must adopt the interpretation which most correctly reflects the reasonable

When forced to reconcile contradictory clauses in an insurance policy,

exclusion. endorsement’s grant of BFWD coverage contradicts the earth movement

movement exclusion, however, remained unaltered. Thus, the special

walls, floors or paved surfaces.” Id

would have been excluded under the subject water exclusion. The earth and added coverage, through its BFWD provision, for damages that otherwise Here, the special endorsement eliminated the subject water exclusion

This contradiction is reflected in Amherst Country Club, Inc. v. ground surface pressing on, or flowing or seeping through . . . [f]oundations, above and the water exclusion that excludes coverage for “[w]ater under the The court focused its inquiry on the earth movement exclusion discussed

resulting from “[w]ater under the ground surface

conflict. of the ground. Id area of coverage and the other remained an exclusion, they would substantially these exclusions substantially overlap and that if one were designated as an could be excluded under either provision, id. at 143-49, demonstrating that

[S]oil conditions which cause settling, cracking or other disarrangement

and thus the water exclusions remained fully in effect. See id. at 142. directly contradicts the BFWD provision, which provides coverage for damage one at issue here, except that the insured had not purchased BFWD coverage to its ultimate destruction. Id. The insured’s policy was nearly identical to the

. at 141-42. This caused the pool to crack and break, leading

cleaning, and, due to high groundwater conditions, the pool floated up and out Amherst Country Club, Inc., the insured drained its pool for annual spring Harleysville Worcester Insurance Co., 561 F. Supp. 2d 138 (D.N.H. 2008). In

added.) seeping through . . . foundations, walls, floor[s] or paved surfaces.” (Emphases for damage caused by the following: pressing on, or flowing or exclusion. The earth movement exclusion, in relevant part, excludes coverage chamber could fairly be considered a “part of realty.” This exclusion, however, pump chamber was caused by “water under the ground surface” and the pump (Emphases added.) This exclusion arguably applies here. The damage to the

soil and the action of water under the ground surface. contraction, expansion, freezing, thawing, erosion, improperly compacted of foundations or other parts of realty. Soil conditions include

upon the earth movement exclusion, and we thus confine our analysis to that Next, we consider the exclusions. On appeal, the defendant relies only paid to the witness, and a list of prior cases in which the witness testified. It

p. 6 require disclosure of the qualifications of the witness, the compensation to be

satisfy the disclosure requirements set forth therein, which, in relevant part, As to RSA 516:29-b, it is clear from the record that the plaintiff did not

the report and prepare to contest it at trial. allowed the plaintiff’s expert to testify. In a motion in Finally, we address the defendant’s claim that the court erred when it

unsustainable exercise of discretion. State v. Roldan We will uphold a trial court’s decision to admit evidence absent an

three months prior to trial. Thus, the defendant had ample time to examine deadline set by the court, it did provide the three-page report approximately Although the plaintiff did not provide its expert report by the disclosure 6 provides coverage for the damage to the plaintiff’s septic system.

The defendant has failed to establish that it suffered actual prejudice. such coverage. Accordingly, we uphold the trial court’s ruling that the policy understand that the additional coverage he paid for does not actually provide additional grant of coverage. Simply put, a reasonable layperson would not The defendant argues that this ruling was error. We disagree. testifying. The court disagreed and permitted the plaintiff’s expert to testify. impeded to a significant degree by the nondisclosure.” Id (2007). Thus, it argued, the plaintiff’s expert should be precluded from

respect to alleged discovery violations.” State v. Gamester

testimony. Id. at 286. omitted). The trial court has wide discretion in admitting or excluding expert exclude coverage for such damage because another policy provision negates the. at 287 (quotation context of a discovery violation, actual prejudice exists if the defense has been expert’s report and its failure to make disclosures required by RSA 516:29-b unreasonable to the prejudice of his case.” Roldan, 151 N.H. at 286. “In the defendant must demonstrate that the ruling was clearly untenable or (2003). “To show that the trial court's decision is not sustainable, the

(2004). “This same standard applies to review of the trial court’s decision with

coverage that covers the damage at issue, the policy would nevertheless reasonably be expected to understand that even though he paid for additional argued that it was prejudiced by the plaintiff’s failure to timely disclose its Under these circumstances, we cannot conclude that a layperson could

Gilford Marina, Inc., 119 N.H. at 790 (quotation omitted). understand that certain exclusions qualified the policy’s grants of coverage.” ordinary layman in the position of the insured could reasonably be expected to Marina, Inc., 119 N.H. 788, 790 (1979). “In so doing, the test is whether the expectations of the insured.” Commercial Union Assurance Co. v. Gilford prejudice of the defendant’s case. See p. 7 plaintiff’s expert to testify was clearly untenable or unreasonable to the therefore, we cannot conclude that the decision of the trial court to allow the

general conclusions, it noted, “were quite similar.” Under these circumstances,

experts, but rather on the reasonableness of the experts’ theories, whose

court’s conclusion; the court’s order focused not on the qualifications of the appear that either of the experts’ qualifications were significant factors in the merits through the testimony of its own expert. Furthermore, it does not

also had the ability to challenge the plaintiff’s expert’s damage theory on its

defendant was “impeded to a significant degree by the nondisclosure.” Roldan conclusion had the required disclosures been made, that does not mean the Although it might have been easier to challenge the plaintiff’s expert’s

DALIANIS, C.J., and HICKS and LYNN, JJ., concurred.

could have been used to research the expert’s qualifications. The defendant. name and the organization for which he works. This information presumably disposal. It had the plaintiff’s expert’s report, and it had the plaintiff’s expert’s id. at 287.

151 N.H. at 287 (quotation omitted). The defendant still had ample tools at its

suffered actual prejudice. background. Nonetheless, we cannot conclude that, as a result, the defendant the plaintiff’s failure to do so prevented it from closely scrutinizing the expert’s provide its expert’s curriculum vitae prior to trial. The defendant argues that appears that, to meet these statutory requirements, the plaintiff had planned to