Court Opinion

ID: 1018780
Source: CourtListenerOpinion
Date Created: 2013-07-04 22:25:43.193248+00
Date Added: 2024-06-11T09:49:29.878813
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                             No. 05-1466

1335 PICCARD LLC,

                                             Plaintiff - Appellant,

           versus

NATIONAL FIRE INSURANCE COMPANY OF HARTFORD,

                                              Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Alexander Williams, Jr., District Judge.
(CA-04-1230-AW)

Argued:   February 1, 2006                 Decided:   March 23, 2006

Before WIDENER, NIEMEYER, and GREGORY, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Roy I. Niedermayer, PALEY, ROTHMAN, GOLDSTEIN, ROSENBERG,
EIG & COOPER, CHTD, Bethesda, Maryland, for Appellant. Vincent
Timothy Bambrick, NILES, BARTON & WILMER, L.L.P., Baltimore,
Maryland, for Appellee. ON BRIEF: Lucinda E. Davis, NILES, BARTON
& WILMER, L.L.P., Baltimore, Maryland, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:

          We are presented with the issue of whether a business

risks insurance policy issued by National Fire Insurance Company

of Hartford (“National Fire”) to 1335 Piccard LLC (“Piccard”)

covers Piccard’s loss of rental income caused by a sewer backup at

one of its commercial properties.

          In May 2001, a municipal sewer backed up into the

commercial building at 1335 Piccard Drive in Rockville, Maryland,

owned by Piccard. Piccard’s first-floor tenant, a medical clinic,

vacated the premises for four months while the premises were being

restored and, during that period, paid only one-half the rent

otherwise due, causing Piccard to sustain a loss of rental income

in the amount of $80,394.52.

          After Piccard restored the building, it submitted a

claim to National Fire for the cost of repair and its loss of

rental income.    National Fire paid Piccard the $50,000 policy

limit for property damage caused by a sewer backup, but it refused

to pay Piccard’s claim for its loss of income, asserting that the

policy did not cover loss of business income caused by a sewer

backup.

          Piccard commenced this action against National Fire in

Maryland state court for $80,394.52, plus interest, costs, and

attorneys fees.   National Fire removed the case to federal court,

based on diversity jurisdiction.      Following the parties’ cross-

                                -2-
motions for summary judgment, the district court entered judgment

in favor of National Fire, concluding that the policy that it

issued to Piccard did not cover loss of business income from a

sewer backup.   This appeal followed.

            The policy -- a “Business Account Package Policy” --

provides in § A that it will pay for “direct physical loss of or

damage to" Piccard’s property "caused by or resulting from any

Covered Cause of Loss" (emphasis added).           In § A.5.f(1), the

policy provides “additional coverage” for “the actual loss of

business   income”   incurred   during   a   suspension   of   operations

“caused by or resulting from any Covered Cause of Loss” (emphasis

added).    The term “Covered Cause of Loss” is defined in § A.3 to

include all risks of direct physical loss unless excluded in

“Section B. EXCLUSIONS.”        The exclusions in § B provide that

losses from sewer backups are not “Covered Causes of Loss.”

Specifically, § B.1.f(3) provides that National Fire “will not pay

for loss or damage caused” by “water that backs up from a sewer or

drain.”    The exclusion, however, does not, by its terms, stop

coverage under § A.6.q, the “Back Up of Sewer or Drain Water

Damage Coverage Extension.”       The coverage extension in § A.6.q

provides that National Fire will pay for “loss or damage to

covered property caused by water that backs up from a sewer or

drain. . . .    The most we will pay for direct physical damage is

[$50,000].”

                                  -3-
            Thus, while the policy provides coverage under § A.6 for

property damage caused by a sewer backup, it does not provide

coverage under § A.5 for business income loss.              A loss of income

is covered only when it is the result of a “Covered Cause of Loss”

and a “Covered Cause of Loss” does not, under § B, include a loss

caused by a sewer backup.         Accordingly, we affirm the district

court.

            Piccard argues that because National Fire paid $50,000

for property damage under § A.6.q (the coverage extension for

sewer backup losses), the loss caused by sewer backup is a “cause

of loss” that is “covered” by the policy such that the business-

income-loss provision also applies because that provision applies

to losses “caused by a Covered Cause of Loss.” Piccard’s argument

asks us to interpret the clause “Covered Cause of Loss” loosely so

as   to   include   any   loss   paid   for   under   the    policy.   This

interpretation, however, would obliterate the specific language of

the policy which defines “Covered Cause of Loss” to exclude losses

caused by a sewer backup (except for $50,000 in physical property

damage).    In determining whether a policy provides coverage, we

must apply the terms of the insurance contract as written, and if

the policy defines terms, we must likewise apply those terms as

defined.    See Bausch & Lomb, Inc. v. Utica Mutual Insurance Co.,

330 Md. 758, 779 (1993).

                                    -4-
              Piccard also argues that the language of § A.6.q is

written so as to afford coverage not only for physical damage to

covered property but also for other types of “loss,” such as

business income loss.        Section A.6.q provides coverage for “loss

or damage to covered property” whereas other sections, such as §

A,   use    the   phrase   “loss   of    or    damage    to   covered    property”

(emphasis added).          Piccard maintains that by leaving out the

preposition “of,” the policy provides separate coverages (1) for

all loss and (2) for damage to covered property, thus delinking

“loss” from “covered property.”

              We do not find Piccard’s construction to be the natural

reading of the policy, especially when we consider the same

omission of the preposition “of” in other places within the

policy. In those provisions, e.g., §§ A.6.c(1), A.6.e, and A.6.f,

if we were to delink “loss” from “covered property,” the policy

would      make   little   sense   and    render   other      policy    provisions

redundant or superfluous. For instance, under Piccard’s argument,

which reads “loss” to stand alone, § A.6.c(1) would read that

National Fire “will pay for direct physical loss . . . caused by

or resulting from a Covered Cause of Loss,” a meaningless phrase,

especially when we consider the language as it relates to the

object of coverage -- valuable papers.                  As written, § A.6.c(1)

provides coverage of “direct physical loss [of] or damage to

                                         -5-
‘valuable papers and records’ . . . caused by or resulting from a

Covered Cause of Loss.”

          Thus, we read the phrase “loss or damage to covered

property” to have the same meaning as the phrase “loss of or

damage to covered property.”   Under both clauses, the word “loss”

is linked to “covered property.”       When applied to § A.6.q,

therefore, “loss” refers to “loss of covered property,” not to

business income loss.

          Because no provision of National Fire’s policy covers

Piccard’s loss of rental income caused by a sewer backup, we

affirm the judgment of the district court.

                                                         AFFIRMED

                                -6-