Opinion ID: 1745503
Heading Depth: 2
Heading Rank: 1

Heading: Whether Summary Judgment Was Properly Denied as to Ambiguity of the Policy.

Text: ¶ 9. USF & G claims that the trial court should have granted its motion for summary judgment because the Policy clearly and unambiguously excludes coverage for Martin's claim. Section I of the Policy states, in relevant part: A. Coverage Provided. We will pay for direct physical loss to Covered Property at the premises described in the Schedule of Premises caused by or resulting from any Covered Cause of Loss. 1. Covered Property. [Omitted.] 2. Property Not Covered. [Omitted.] 3. Coverage Extensions. [Omitted]. 4. Additional Coverage. ... v. Sewer or Drain Backup. We will pay for direct physical loss to Covered Property at the premises described in the Schedule of Premises if the loss is caused by water that: (1) Backs up through sewers or drains, or (2) Enters into and overflows from within: (a) A sump pump, (b) A sump pump well, or (c) Any other system, designed to remove subsurface water from the foundation area. The most we will pay for this Additional Coverage is $25,000 or the Limit of Insurance shown in the Property Coverage Part Declarations for Sewer or Drain Backup, whichever is greater. B. Covered Causes Of Loss. [Omitted.] C. Exclusions. 1. We will not pay for loss to Covered Property caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. Unless otherwise stated, the following exclusions apply to all SECTION I-Coverages. a. Water. (1) Flood, surface water, tides, tidal waves, overflow of any body of water, or their spray, all whether driven by wind or not. ... [2] ¶ 10. USF & G claims that the trial court wrongly denied its motion for summary judgment as to ambiguity of the Policy. USF & G argued in part that [t]he insurance policy clearly and unambiguously excludes coverage for the Plaintiffs' water damage claim. USF & G claimed that the water exclusion in the Policy is almost identical to a water exclusion found by the Southern District of Mississippi to be clear and unambiguous. Eaker v. State Farm Fire & Cas. Ins. Co., 216 F.Supp.2d 606, 622 (S.D.Miss.2001). Martin argued that the policy was ambiguous and should, therefore, be construed in her favor. ¶ 11. After a hearing, the trial court denied summary judgment on the grounds of ambiguity. The trial court first reviewed the relevant case law and set out the rules of construction for insurance contracts: 1. Where, an insurance contract is plain and unambiguous, it should be construed as written, like other contracts. 2. Insurance Contracts are construed most strongly against party drafting contract, and most favorably to the policyholder. 3. Where terms of insurance contracts are ambiguous or doubtful, contract must be construed most favorably to insured and against insurer. 4. Insurance contracts must be given a reasonable and sensible interpretation, and where policy is subject to two interpretations equally reasonable, that which gives the greater indemnity to the insured should be adopted. 5. Where there is no practical difficulty in making the language of an insurance contract free from doubt, any doubtful provision in the policy should be construed against the insurer. 6. Terms of insurance policies are construed favorably to insured wherever reasonably possible, particularly exclusion clauses. 7. Although ambiguities of insurance contract should be construed against insurer, court cannot alter or change contract where terms are not ambiguous, despite resulting hardship on insured. State Farm Mut. Auto. Ins. Co. v. Scitzs, 394 So.2d 1371, 1372-73 (Miss.1981). The trial court noted that there is no case exactly on point from this Court. The trial court then distinguished Eaker. Eaker, 216 F.Supp.2d at 622. In Eaker, the insurance policy excluded coverage for damage from water, which it explicitly defined as including flood, surface water, overflow of a body of water, and water from outside the plumbing system that enters through sewers or drains, or water which enters into and overflows from within a sump pump, sump pump well or any other system designed to remove subsurface water which is drained from the foundation area.... Id., 216 F.Supp.2d at 622. The trial court reasoned that since the policy in Eaker explicitly excluded water from sewer or drain backup, it was distinguishable from this case, where 1) the water exclusion does not explicitly exclude water from a sewer or drain backup, and 2) damage from sewer or drain backup is listed under Additional Coverage. The trial court concluded that the language in the Policy is contradictory, if not ambiguous. ¶ 12. The standard of review for summary judgment motions is de novo. See, e.g., Germany v. Denbury Onshore, LLC, 984 So.2d 270, 275 (Miss.2008) (citations omitted). When deciding to grant or deny summary judgment, a court must review the record before it and take all the evidence in the light most favorable to the non-moving party. Id. The trial court's decision regarding summary judgment will be affirmed if the record before the trial court shows that there is no genuine issue of material fact and that the movant is entitled to a judgment as a matter of law. Id. After a review of the legal precedent and rules of construction for contracts and insurance policies, we believe that the trial court correctly determined that the Policy is ambiguous. Therefore, there is a genuine issue of material fact as to whether or not the Policy covered Martin's claim, and USF & G was not entitled to judgment as a matter of law. ¶ 13. Since this is an issue of first impression in this Court, we must rely on the legal principles and apply them to the facts in this case. This Court's precedent has restated the rules set out in Scitzs. It is now firmly established that if a contract is clear and unambiguous, then it must be interpreted as written. See, e.g., Noxubee County Sch. Dist. v. United Nat'l Ins. Co., 883 So.2d 1159, 1165 (Miss. 2004). A policy must be considered as a whole, with all relevant clauses together. J & W Foods Corp. v. State Farm Mut. Auto. Ins. Co., 723 So.2d 550, 552 (Miss. 1998). If a contract contains ambiguous or unclear language, then ambiguities must be resolved in favor of the non-drafting party. Id.; Crum v. Johnson, 809 So.2d 663, 666 (Miss.2002). Ambiguities exist when a policy can be logically interpreted in two or more ways, where one logical interpretation provides for coverage. Crum, 809 So.2d at 666; Universal Underwriters Ins. Co. v. Buddy Jones Ford Lincoln-Mercury, Inc., 734 So.2d 173, 176 (Miss.1999). However, ambiguities do not exist simply because two parties disagree over the interpretation of a policy. Heart-South, PLLC v. Boyd, 865 So.2d 1095, 1105 (Miss.2003). Exclusions and limitations on coverage are also construed in favor of the insured. Noxubee County Sch. Dist., 883 So.2d at 1165. Language in exclusionary clauses must be clear and unmistakable, as those clauses are strictly interpreted. Miss. Farm Bureau Mut. Ins. Co. v. Jones, 754 So.2d 1203, 1204 (Miss.2000). Nevertheless, a court must refrain from altering or changing a policy where terms are unambiguous, despite resulting hardship on the insured. Titan Indem. Co. v. Estes, 825 So.2d 651, 656 (Miss.2002) (citing Scitzs, 394 So.2d at 1373). ¶ 14. Taken as a whole, and in the light most favorable to the non-moving party, the relevant portions of the Policy are not clear and unambiguous, and could lead a reasonable person to two interpretations without straining to create ambiguity. First, one could interpret subsection I.A.4.v. regarding sewer or drain backup to fall under the unless otherwise stated exception to the general water exclusion in subsection I.C.1.a. Subsection I.A.4.v. does clearly begin with [w]e will pay for direct physical loss from sewer or drain backup. Under this interpretation, the Policy covers damage caused by sewer or drain backup despite the overall water exclusioneven in the case of damage from flood, surface water, or overflow of any body of water. [3] ¶ 15. On the other hand, one could understand subsection I.C.1.a. to apply to all types of coverage under subsection I.A. whenever certain types of water contributed to the damage. Under this view, the Policy excludes coverage for damage caused by sewer or drain backup if the damage occurred in part because of flood, surface water, or overflow of any body of water. ¶ 16. Since the relevant provisions in the Policy are subject to two reasonable interpretations and because exclusion clauses must be strictly construed, the terms of the Policy will be interpreted in favor of the non-drafter, the insured. In other words, the Policy will be interpreted as a whole to cover damage caused by water from sewer or drain backup, even when some damage may have resulted from flood, surface water, or overflow or any body of water. ¶ 17. Therefore, we believe that USF & G failed to prove that there was no genuine issue of material fact regarding whether or not the Policy covered Martin's claim. See, e.g., Denbury Onshore, LLC, 984 So.2d at 275. The issue of coverage under the Policy needed to be decided by a jury, and the jury was properly given the opportunity to decide this issue. The jury was given the following jury instruction: If you find that the Plaintiff, DEBBIE MARTIN d/b/a CARTMELL GALLERY has established by a preponderance of the evidence that the Plaintiff is entitled to recover for claims under any one or all of the following provisions of the policy: 1) Sewer or Drain Backup and/or 2) Fine Arts and/or 3) Electronic Data Processing Systems you will then consider the issue of the Plaintiff, DEBBIE MARTIN d/b/a CARTMELL GALLERY's damages, separately under each coverage. The jury then returned a verdict for Martin and checked the box next to the following text on the jury instruction: We the jury find for the Plaintiff on her claim for coverage on sewer or drain backup and that the Plaintiff is entitled to damages in the amount of $39,329 for coverage under the sewer or drain backup coverage. The jury also checked the boxes finding for Martin for fine arts and electronic data processing systems coverage and indicated the appropriate damage awards. ¶ 18. Because there was a genuine issue of material fact for the jury regarding sewer or drain backup coverage under the Policy, the trial court correctly denied USF & G's motion for summary judgment on this point.