Opinion ID: 1239373
Heading Depth: 1
Heading Rank: 11

Heading: Cases Construing Earth Movement Exclusions

Text: A. Jurisdictions holding that earth movement exclusions are ambiguous, and limited in application only to naturally-occurring catastrophic events include: Winters v. Charter Oak Fire Ins. Co., 4 F.Supp.2d 1288 (D.N.M. 1998) (water line broke in policyholder's clubhouse, causing soil beneath clubhouse to shift and damaging building; court held that coverage could exist because earth movement exclusion applied only to naturally-occurring earthquake-type phenomena; any earth movement in this case was caused by a man-made source, that is, a water line); Cox v. State Farm Fire & Cas. Co., 217 Ga.App. 796, 459 S.E.2d 446 (1995) (policyholder's home damaged by vibrations from explosions; insurance company denied coverage citing earth movement exclusion; court found policy ambiguous, applied principle of ejusdem generis and found exclusion limited to earth movement from natural causes; man-made forces such as explosions were covered under the policy); Boston Company Real Estate Counsel, Inc. v. Home Ins. Co., Inc., 887 F.Supp. 369 (D.Mass.1995) (before constructing office building, engineers reported soil was unsuitable and would not support building; contractor continued to construct building, and building settled at a rate exceeding expectations; court held meaning of earth movement exclusion was confined to its commonplace usagereferring only to sudden, cataclysmic events (e.g. earthquakes); gradual soil compression was therefore not earth movement as defined by exclusion); American Motorists Ins. Co. v. R & S Meats, Inc., 190 Wis.2d 196, 526 N.W.2d 791 (1994) (city negligently constructed storm sewer; after heavy rain, water flowed beneath floor of policyholder's building and blast freezer; water froze under freezer floor, causing floor to heave upward damaging walls, pillars, and ceiling beams; court held that earth movement exclusion was not applicable to human action, and therefore did not bar coverage); Sentinel Associates v. American Manufacturers Mut. Ins. Co., 804 F.Supp. 815 (E.D.Va.1992) (policyholder's shopping center damaged when soil supporting foundation washed away by broken water line; court construed earth movement exclusion to apply only to natural, rather than man-made, phenomena; genuine issue of fact remained of whether natural forces (settling) or a man-made problem (leaking water pipe) caused the damage); Steele v. Statesman Ins. Co., 530 Pa. 190, 607 A.2d 742 (1992) (next-door neighbor overloaded property during construction, causing hillside to collapse onto policyholder's house; court applied ejusdem generis doctrine and construed earth movement and landslide exclusion to apply only to natural events; coverage existed for hillside collapse due to man-made event of construction); Howell v. State Farm Fire & Cas. Co., 218 Cal.App.3d 1446, 267 Cal.Rptr. 708 (1990) (summer brush fire destroyed vegetation, and subsequent winter rain triggered landslide damaging insured property; policy provided coverage for losses caused by brush fire; under California statute, earth movement and water damage exclusions could only operate to avoid coverage if an excluded event (earth movement or water damage rather than brush fire) was the efficient proximate cause of the loss); Safeco Ins. Co. of America v. Hirschmann, 112 Wash.2d 621, 773 P.2d 413 (1989) (heavy rain and high winda covered riskcaused landslide which damaged policyholder's home; insurance company argued policy excluded coverage for earth movement whether occurring alone or in any sequence with a covered peril; court held issue of which event (rain and wind or landslide) was the efficient proximate cause of loss was question of fact, and that exclusions only circumvented coverage when the excluded peril was the efficient proximate cause of loss); Garvey v. State Farm Fire & Cas. Co., 48 Cal.3d 395, 257 Cal.Rptr. 292, 770 P.2d 704 (1989) (addition to policyholder's house pulled away; policyholder alleged loss caused by contractor negligence; insurance company denied coverage and alleged loss caused by excluded event of earth movement; court ruled that in light of conflicting evidence, question of which event was the proximate cause of the loss, and thereby whether coverage existed, was a jury question); Clyce v. St. Paul Fire & Marine Ins. Co., 850 F.2d 1398 (11th Cir.1987) (retaining wall and basement wall damaged, allegedly due to earth pressures; insurance company refused coverage under earth movement exclusion; court held that earth movement and earth pressures were significantly different terms for coverage purposes, and evidence created jury question as to whether coverage existed); Peters Township School Dist. v. Hartford Acc. & Indemn. Co., 833 F.2d 32 (3d Cir. 1987) (schools damaged by subsidence in mines inactive for nearly 50 years; court held that earth movement exclusions have historically related to natural, catastrophic earth movement; because mine subsidence was not natural but the result of man's activity, coverage existed under policy); Jones v. St. Paul Ins. Co., 725 S.W.2d 291, 294 (Tex.Ct.App.1986) (court found earth movement exclusion unambiguous, but concluded that settling of policyholder's house resulting from soil contracting as it dried was not earth movement as contemplated by the policy. The earth movement exclusion contemplates abnormally large movements such as the examples listed.); Villella v. Public Employees Mut. Ins. Co., 106 Wash.2d 806, 725 P.2d 957 (1986) (building contractor negligently failed to provide proper drainage around policyholder's house, causing foundation to be undermined and house to settle; insurance company argued coverage precluded if earth movement contributed to the loss, regardless how slight in degree; court disagreed, holding that if negligent construction was the efficient proximate cause of loss, coverage existed); Henning Nelson Constr. Co. v. Fireman's Fund American Life Ins. Co., 383 N.W.2d 645 (Minn.1986) ([T]he earth movement exclusion must be construed to apply to earth movements caused by widespread disasters and not to those caused by human forces. Court found coverage when eight possible man-made causes combined on construction site to push earth against foundation wall and cause its collapse); Ariston Airline & Catering Supply Co. v. Forbes, 211 N.J.Super. 472, 511 A.2d 1278 (1986) (earth movement exclusion limited to natural phenomena akin to earthquakes, landslides or floods; exclusion did not exclude coverage for frost-heave damage to freezer floor caused by design and construction defects); United Nuclear Corp. v. Allendale Mut. Ins. Co., 103 N.M. 480, 709 P.2d 649 (1985) (earthen dam collapsed due to differential settling, releasing 94 million gallons of uranium tailings; applying doctrine of ejusdem generis, court construed term earth movement to cover only natural phenomenon, and exclusion did not apply to the collapse of the dam); Holy Angels Academy v. Hartford Ins. Group, 127 Misc.2d 1024, 487 N.Y.S.2d 1005 (N.Y.Sup. 1985) (policyholder's building damaged by construction of subway tunnel; court held losses covered by policy, and found earth movement exclusion inapplicable because exclusion was only designed to remove from coverage losses occurring from natural causes such as earthquakes); Mattis v. State Farm Fire & Cas. Co., 118 Ill.App.3d 612, 73 Ill.Dec. 907, 454 N.E.2d 1156 (1983) (policyholder's basement wall displaced by settling of backfill due to improper construction; court held earth movement exclusion was ambiguous, limited to same class as earthquake and landslide, and did not provide insurance company a basis for denial of coverage); Bly v. Auto Owners Ins. Co., 437 So.2d 495 (Ala.1983) (policyholder's house damaged by vibrations from logging trucks; court held loss was outside earth movement exclusion because the enumerated types of earth movement are all natural phenomena); Barash v. Insurance Co. of North America, 114 Misc.2d 325, 451 N.Y.S.2d 603, 607 (1982) (fill beneath policyholder's home decomposed and foundation collapsed; court held earth movement exclusion limited to sudden earth movement on a large scale, and deterioration of the fill beneath one house is not a large-scale earth movement; loss was outside exclusion); State Farm Ins. Companies v. Gilbert, 3 Ark.App. 52, 621 S.W.2d 880 (1981) (retaining wall collapsed into policyholder's yard; court held that because exclusionary clause contained only the term earth movement alone without other limiting words, term was ambiguous and question of fact was created over meaning of the term); Peach State Uniform Service, Inc. v. American Ins. Co., 507 F.2d 996 (5th Cir.1975) (policyholder's building collapsed when sewer caved in beneath foundation; court held loss outside policy exclusion for other earth movement; phrase was ambiguous, and would be construed to refer only to phenomena related to forces operating within the earth itself); Wisconsin Builders, Inc. v. General Ins. Co. of America, 65 Wis.2d 91, 221 N.W.2d 832 (1974) (policyholder-contractor built apartment building beneath bluff; to prevent landslides, policyholder filled space between building and bluff with twice the specified amount of fill; weight of fill dirt combined with bulldozer moving dirt caused apartment wall to collapse; trial court erred in defining earth movement as all movements of the earth whether it be up, down or sideways; term earth movement should be limited to same class of peril as earthquake and landslide, and case remanded for trial); Strubble v. United Services Automobile Association, 35 Cal.App.3d 498, 110 Cal.Rptr. 828 (1973) (insured's home damaged by landslide triggered by earthquake; court held that because policy provided coverage for earthquake, landslide exclusion was inapplicable and coverage existed under policy); Vormelker v. Oleksinski, 40 Mich.App. 618, 199 N.W.2d 287 (1972) (contractor ignored engineer's report and built policyholder's home on unstable soil; soil shifted, damaging home; insurance company asserted earth movement exclusion; court concluded that whether proximate cause of loss was earth movement (excluded) or improperly constructed foundation (covered) was a jury question); Gullett v. St. Paul Fire & Marine Ins. Co., 446 F.2d 1100 (7th Cir.1971) (boulders from retaining wall fell on policyholder's building; court applied doctrine of ejusdem generis and held earth movement exclusion limited to earthquakes and landslides; jury question existed as to whether loss was caused by falling objectsa covered perilor landslidean excluded peril); Government Employees Ins. Co. v. DeJames, 256 Md. 717, 261 A.2d 747 (Md.App.1970) (foundation of policyholder's house collapsed due to possible contractor negligence; court held that under doctrine of ejusdem generis, term earth movement was limited to unusual movement and not normal pressures and settling); Wyatt v. Northwestern Mut. Ins. Co. of Seattle, 304 F.Supp. 781 (D.Minn.1969) (contractor excavated property adjacent to policyholder's home removing lateral support and damaging home; insurance company denied coverage citing earth movement exclusion; court limited exclusion to occasional major disasters which are almost impossible to predict and thus insure against such as earthquakes and floods; exclusion did not apply to earth movement events involving human action); General Ins. Co. of America v. Lapidus, 325 F.2d 287 (9th Cir.1963) (policy excluded coverage for settling but contained coverage for landslide; court found coverage existed for continuing slippage of soil around insured's home); and Anderson v. Indiana Lumbermens Mutual Ins. Co., 127 So.2d 304 (La.App.1961) (policy excluded coverage for earth movement, but covered landslides; coverage existed for settling because it was a collapse.). B. Jurisdictions that have concluded that earth movement exclusions are not ambiguous, and apply to absolve the insurance company from any liability under the policy regardless of the cause or type of earth movement, include: State Farm Fire & Cas. Co. v. Bongen, 925 P.2d 1042 (Alaska 1996) (construction company clear cut land above policyholder's property; heavy rains caused mudslide that damaged property; court held that earth movement exclusion was unambiguous and precluded coverage); Kula v. State Farm Fire & Cas. Co., 212 A.D.2d 16, 628 N.Y.S.2d 988 (N.Y.A.D.1995) (water line from policyholder's well ruptured, washing out dirt supporting one corner of house and damaging foundation; court found policy unambiguously excluded coverage for earth movement regardless of the cause, whether natural or human); Alf v. State Farm Fire & Cas. Co., 850 P.2d 1272 (Utah 1993) (water line to policyholder's house froze and burst, washing away soil beneath tennis court and driveway; court found that while damage to the pipe was covered, policy unambiguously excluded coverage for earth movement); Schroeder v. State Farm Fire & Cas. Co., 770 F.Supp. 558 (D.Nev.1991) (water pipe ruptured, saturating soil and causing damage to policyholder's building; court, held policy unambiguous and excluded earth movement caused by non-natural phenomena); Millar v. State Farm Fire & Cas. Co., 167 Ariz. 93, 804 P.2d 822 (1990) (policyholder's home damaged when soil beneath it sank due to water escaping from broken sprinkler system; court found earth movement exclusion unambiguous and denied coverage); Village Inn Apartments v. State Farm Fire & Cas. Co., 790 P.2d 581 (Utah App.1990) (water pipe ruptured, saturating soil beneath policyholder's apartments and causing foundation to settle eight inches; earth movement exclusion unambiguous and precluded recovery); Nida v. State Farm Fire & Cas. Co., 454 So.2d 328 (La.App.1984) (policyholder's home damaged when clay soil beneath home expanded and contracted; court found earth movement exclusion unambiguous and denied coverage); Stewart v. Preferred Fire Ins. Co., 206 Kan. 247, 477 P.2d 966 (1970) (policyholder's home sank into mine shaft underlying property; court declined to apply ejusdem generis, and held earth movement clause includes act originating from the carelessness of man); Underwood v. United States Fidelity & Guaranty Co., 118 Ga.App. 847, 165 S.E.2d 874 (1968) (city negligently widened creek, causing water to damage bridge serving as policyholder's driveway; court found earth movement exclusion unambiguous, and because earth movement contributed to the loss, no coverage existed). C. For additional sources, see B. Mattis, Earthquake and Earth Movement Claims Under All-Risk Insurance Policies in the New Madrid Fault Zone, 21 Mem.St. U.L.Rev. 59 (1990); B. Mattis, Earth Movement Claims Under All Risk Insurance: The Rules Have Changed in California, 31 Santa Clara L.Rev. 29 (1991). See generally, R. Brazener, Property Insurance: Construction and Effect of Provision Excluding Loss Caused by Earth Movement or Earthquake, 44 A.L.R.3d 1316 (1972).