Opinion ID: 1210817
Heading Depth: 3
Heading Rank: 2

Heading: The Commonwealth Policy

Text: Six Flags argues that the Commonwealth Flood definition endorsement evidences the Excess Insurers' intent to prevent the applicability of the Flood sublimit to loss caused by a Named Storm. In its only relevant departure from the other Excess Policies, the Commonwealth Flood definition endorsement replaces the language to define the term Flood. It states that: The term flood is defined as loss or damage caused by waves, tidal water or tidal wave, overflow of streams or other bodies of water, or spray from any of the foregoing, all whether driven by wind or not. Loss resulting from, contributed to or aggravated by a flood caused by a peril not otherwise excluded under this policy shall not be considered in application of the policy flood limit or deductible provisions. Six Flags argues that this endorsement clarifies, for the Commonwealth policy as well as for the non-Commonwealth Excess Policies, that Flood caused by the peril of a Named Storm is not considered in the application of the Flood sublimit. The Excess Insurers counter that Commonwealth's definition of Flood means only that loss caused by other perils is not subject to the Flood sublimit and the inclusion of the phrase all whether driven by wind or not, which has been universally interpreted to include hurricane-related flooding, would be rendered ineffective. We conclude that the Commonwealth Flood definition endorsement creates an ambiguity in the Commonwealth policy but not the non-Commonwealth Excess Policies. One reasonable interpretation of the endorsement, when considered with the entire Commonwealth policy, is that loss resulting from a flood caused by a peril (such as a Named Storm) is not subject to the Flood sublimit. The Excess Insurers do not dispute that Hurricane Katrina was a Named Storm and cannot (at least at this time) dispute that Hurricane Katrina caused the flooding at issue here. Thus, under this interpretation, the Flood sublimit would not apply to loss resulting from the flood at the Six Flags New Orleans theme park caused by Hurricane Katrina. The Excess Insurers counter that Commonwealth's re-wording was meant only to clarify that loss caused by a separate peril is not subject to the Flood sublimit when that loss also resulted from Flood. [13] Thus, the Excess Insurers argue that caused by a peril modifies lossfor Six Flags, caused by a peril modifies flood. Even if this alternative interpretation is reasonable, which we do not decide at this time, the existence of two reasonable alternative interpretations would create an ambiguity in the Commonwealth policy. See Bonin, 930 So.2d at 911 (holding that a provision in an insurance contract is ambiguous if it is susceptible to two or more reasonable interpretations). While we do not conclude at this time that only one reasonable interpretation is possible, we simply hold that at least one reasonable interpretation favors coverage of the loss from Hurricane Katrina without application of the Flood sublimit. The district court may decide in the first instance whether the Excess Insurers' proposed alternative interpretations are reasonable. [14] The Excess Insurers also contend that our interpretation of the Commonwealth policy would render ineffective the phrase all whether driven by wind or not. We have interpreted similar language to exclude coverage for hurricane-caused flooding where the policies at issue expressly deny coverage for flooding caused or contributed to by other perils. See Tuepker, 507 F.3d at 352, 354; Leonard, 499 F.3d at 430, 437-38. The phrase, however, is not rendered ineffective here because the Commonwealth policy does not comparably provide for the applicability of the Flood sublimit if the flooding was caused by another peril and because the endorsement arguably dictates the opposite result. [15] As noted above, a reasonable interpretation of the policy is that water driven by wind is Floodgiving meaning to that provision; however, if that wind-driven Flood is caused by another covered peril, such as a Named Storm, then the Flood sublimit does not apply. Because a reasonable reading of the Commonwealth Flood definition endorsement leads to the conclusion that it excludes the applicability of the Flood sublimit to Flood that was caused by the peril of a Named Stormin this case, Hurricane Katrinawe therefore reverse the district court's order granting summary judgment to Commonwealth and remand to the district court. [16] Six Flags asserts that this conclusion extends to the non-Commonwealth Excess Policies. In particular, it argues that the definition of Flood in the non-Commonwealth Excess Policies should be read in light of the definition contained in the Commonwealth Flood definition endorsement. [17] The non-Commonwealth Excess Policies do not contain a provision that similarly conditions the applicability of the Flood sublimit on the peril causing the flood. Thus, to the extent that the Commonwealth policy differs from the non-Commonwealth Excess Policies, Six Flags asks us to modify the non-Commonwealth Excess Policies to find an ambiguity. We decline to interpret the non-Commonwealth Excess Policies by reference to the Commonwealth Flood definition endorsement. Louisiana statutory rules require that: No agreement in conflict with, modifying, or extending the coverage of any contract of insurance shall be valid unless it is in writing and physically made a part of the policy or other written evidence of insurance, or it is incorporated in the policy or other written evidence of insurance by specific reference to another policy or written evidence of insurance. LA.REV.STAT. ANN. § 22:867. Thus, our inquiry focuses on whether the Excess Policies incorporate the Commonwealth policy or Commonwealth Flood definition endorsement by specific reference. See Ins. Co. of N. Am. v. Bd. of Comm'rs of Port of New Orleans, 733 F.2d 1161, 1167 (5th Cir.1984). Sufficient specific references include such phrases as as per primary policies, id.; as per Underlying policy(ies) as far as applicable, Heinhuis v. Venture Assocs., Inc., 959 F.2d 551, 552-53 (5th Cir.1992); or, the provisions of the immediate underlying policy are incorporated as a part of this policy, Hunter v. Office of Health Servs., 385 So.2d 928, 937 (La.Ct.App.1980). The non-Commonwealth Excess Policies contain no such words of incorporation. The only discussion of the other policies is the Excess Clause, which states that, inter alia, the primary level insurance policies may insure different risks than the Excess Policies, and the Participation Clause, which sets out the proportion of each layer of coverage for which the particular insurer is liable. Like all sophisticated corporations using an agent, Six Flags could have required that its insurers use identical words in all of the applicable policies, but it did not do so in this case. Six Flags has pointed us to no authority supporting the coextensive interpretation of differing policies so long as the insured intended to obtain the same coverage from each policy. [18] At minimum, because it is the Commonwealth Flood definition endorsement's language and not the common provisions of the Excess Policies that creates the ambiguity, we cannot impose that ambiguity on all of the Excess Insurers, particularly here where other Excess Insurers did not incorporate the Commonwealth Flood definition endorsement. We therefore hold that we must review the Excess Policies as independent units.