Court Opinion

ID: 8213668
Source: CourtListenerOpinion
Date Created: 2022-10-12 21:01:16.487+00
Date Added: 2024-06-11T16:42:24.211187
License: Public Domain

USCA4 Appeal: 19-2217      Doc: 41         Filed: 10/11/2022    Pg: 1 of 8

                                            UNPUBLISHED

                               UNITED STATES COURT OF APPEALS
                                   FOR THE FOURTH CIRCUIT

                                              No. 19-2217

        BLISSFUL ENTERPRISES, INC., trading as Comfort Inn & Suites - Edgewood,

                            Plaintiff – Appellant,

                     v.

        CINCINNATI INSURANCE COMPANY,

                            Defendant – Appellee.

        Appeal from the United States District Court for the District of Maryland, at Baltimore.
        George L. Russell, III, District Judge. (1:18-cv-01221-GLR)

        Argued: October 27, 2021                                      Decided: October 11, 2022

        Before DIAZ and RUSHING, Circuit Judges, and FLOYD, Senior Circuit Judge.

        Affirmed by unpublished per curiam opinion.

        ARGUED: Eric Broch Lawson, SILVER & BROWN, Fairfax, Virginia, for Appellant.
        Bryant S. Green, NILES, BARTON & WILMER, LLP, Baltimore, Maryland, for Appellee.
        ON BRIEF: C. Thomas Brown, SILVER & BROWN, Fairfax, Virginia, for Appellant.
        Craig D. Roswell, NILES, BARTON & WILMER, LLP, Baltimore, Maryland, for
        Appellee.

        Unpublished opinions are not binding precedent in this circuit.
USCA4 Appeal: 19-2217      Doc: 41         Filed: 10/11/2022      Pg: 2 of 8

        PER CURIAM:

               Blissful Enterprises, Inc., owns and operates a hotel in Edgewood, Maryland.

        Blissful insured the hotel property through a policy issued by Cincinnati Insurance

        Company. After Cincinnati denied Blissful’s claim for the cost of repairing a damaged

        underground pipe, Blissful sued. The district court granted summary judgment in favor of

        Cincinnati. We affirm.

                                                     I.

               In January 2016, Blissful employees discovered a large hole in the ground next to

        the hotel building. Blissful reported the finding, which it characterized as a “sinkhole,” to

        Cincinnati and stated that underground pipes forming part of the hotel’s storm-water

        drainage system may have been damaged. A week later, a Cincinnati claims specialist sent

        Blissful a reservation-of-rights letter. The letter explained that the insurance policy “may

        provide coverage to damages resulting from the development of a sinkhole,” though the

        cost of “filling the sinkhole itself” would not be covered. J.A. 321. It also noted that “if

        there are damages to underground pipes, drains or flues, they must be physically attached

        to Covered Property for the policy to respond.” J.A. 321. The letter reminded Blissful that

        the cost of any investigation into whether pipes were damaged by a sinkhole or were

        attached to the building was to be borne by Blissful.

               Blissful then retained an engineer, William Baker, to investigate the hole on the

        property. Baker summarized his findings in a February 3 letter to Cincinnati, stating that

        a “metal pipe has failed at the connection to the existing concrete manhole. The result[] is

        a large amount of soil has been displace[d] down the pipe, has caused two small retaining

                                                     2
USCA4 Appeal: 19-2217       Doc: 41         Filed: 10/11/2022      Pg: 3 of 8

        walls to fail and to void soil from under concrete and stone inlet aprons located in a

        drainage swale. The loss of soil will soon be affecting the foundation and the building

        structure.” J.A. 326. The next day, a Cincinnati claims specialist told Blissful that, “based

        on the engineer’s report and hotel site plan, we will provide coverage for the underground

        piping [but not for the cost of] filling the sinkhole itself.” J.A. 658. Over the next two

        months, Blissful negotiated a bid with Comer Construction, Inc., to repair the damage to

        the pipe. The estimated repair cost was $335,484.

               After receiving this estimate from Blissful, Cincinnati chose to inspect the loss and

        evaluate the proposal. Cincinnati contacted Baker, the engineer retained by Blissful, to

        investigate whether the incident was a sinkhole as defined by the insurance policy. Baker

        could not confirm that it was a sinkhole so defined; therefore, the parties each retained an

        expert and scheduled a joint inspection of the property for May 23, 2016. After the

        inspection, Blissful’s expert opined that “the bottom portion of the metal pipe is

        significantly corroded resulting in a loss in the structural integrity of the pipe that in turn

        appears to have contributed to the lateral deflection or shearing in the pipe and its

        subsequent collapse.” J.A. 392. “As a result of the collapse of the pipe, the pipe sheared

        from the opening into the southern side of the box manhole structure, . . . allowing [the

        surrounding soils] to become mobilized and enter into the storm drain where they were

        transported down gradient into the storm drain system resulting in the formation of a large

        sinkhole.” J.A. 393. Cincinnati’s expert disputed the sinkhole characterization but agreed

        that “[t]he hole has occurred because of a breach in the pipe where it connects to the

                                                      3
USCA4 Appeal: 19-2217      Doc: 41         Filed: 10/11/2022      Pg: 4 of 8

        manhole has resulted in soil movement. The pipe breach has allowed for the soil in the

        area to enter the pipe and be transported away leaving a hole.” J.A. 335.

               On August 1, 2016, having determined that the loss was not actually caused by a

        sinkhole as defined in the policy, Cincinnati denied all coverage for the loss. Blissful sued

        Cincinnati in Maryland state court, alleging breach of contract and promissory estoppel.

        Cincinnati removed the case to federal court, and both sides moved for summary judgment.

        The district court granted summary judgment in favor of Cincinnati, and Blissful appealed.

                                                     II.

               “We review de novo a district court’s grant or denial of a motion for summary

        judgment, construing all facts and reasonable inferences therefrom in favor of the

        nonmoving party.” Gen. Ins. Co. of Am. v. U.S. Fire Ins. Co., 886 F.3d 346, 353 (4th Cir.

        2018), as amended (Mar. 28, 2018). Summary judgment is warranted “if the movant

        shows that there is no genuine dispute as to any material fact and the movant is entitled to

        judgment as a matter of law.” Fed. R. Civ. P. 56(a). “When faced with cross-motions for

        summary judgment, the court must review each motion separately on its own merits to

        determine whether either of the parties deserves judgment as a matter of law.” Rossignol

        v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003) (internal quotation marks omitted).

               The parties agree that Maryland substantive law governs this contract dispute.

        “Under Maryland law, insurance policies are interpreted in the same manner as contracts

        generally; there is no rule in Maryland that insurance policies are to be construed most

        strongly against the insurer.” Catalina Enters., Inc. Pension Tr. v. Hartford Fire Ins. Co.,

                                                     4
USCA4 Appeal: 19-2217       Doc: 41        Filed: 10/11/2022       Pg: 5 of 8

        67 F.3d 63, 65 (4th Cir. 1995) (citing Collier v. MD-Individual Prac. Ass’n, 607 A.2d 537,

        539 (Md. 1992)); see Connors v. Gov’t Emps. Ins. Co., 113 A.3d 595, 603–605 (Md. 2015).

              Blissful’s insurance policy is an “all risks” policy, meaning it covers all risks of loss

        unless specifically excluded by the policy. The main coverage form of the policy—the

        Building and Personal Property Coverage Form—excludes underground pipes from

        coverage. But Blissful purchased a Hotel Commercial Property Endorsement, which

        includes a provision extending coverage to underground property. In relevant part, the

        Underground Property Extension states:

                     BUILDING AND PERSONAL PROPERTY COVERAGE
                     FORM, SECTION A. COVERAGE, 5. Coverage
                     Extensions is amended to include the following:

                     Underground Property

                     (1) We will pay for ‘loss’ resulting from any of the Covered
                         Causes of Loss to:

                              ...

                              (b) Underground pipes, flues or drains if they are
                                  attached to Covered Property.

                     ...

                     (3) For this Coverage Extension, SECTION A.
                         COVERAGE, 2. Property Not Covered, n.
                         Underground Pipes, Flues or Drains is deleted in its
                         entirety and replaced by the following:

                           n. Underground Pipes, Flues or Drains

                              Underground pipes, flues or drains, except as provided
                              in SECTION A. COVERAGE, 5. Coverage
                              Extensions.

                                                      5
USCA4 Appeal: 19-2217       Doc: 41          Filed: 10/11/2022       Pg: 6 of 8

        J.A. 113–114.

                “Covered Causes of Loss” is a defined term in the policy that means risks of direct

        physical loss unless the loss is limited or excluded by the policy. Cincinnati identifies three

        exclusions that it claims prevent coverage here. First, the policy excludes from coverage

        “‘loss’ caused by or resulting from . . . [r]ust or other corrosion, decay, deterioration, hidden

        or latent defect or any quality in property that causes it to damage or destroy itself[.]” J.A.

        40. The district court correctly held that this exclusion applies here, and Blissful does not

        meaningfully contest that conclusion on appeal. Second, Cincinnati contends, and the

        district court held, that the “earth movement” exclusion applies. We need not address that

        argument, as we agree with the district court that other exclusions apply to preclude

        coverage under the Underground Property Extension. Third, the policy excludes loss

        caused by or resulting from “[c]ollapse,” except as provided in the Collapse Extension.

        J.A. 42. That extension is the focal point of this appeal.

               As relevant here, the Collapse Extension states:

                      (2) We will pay for “loss” to Covered Property, caused by
                          collapse of a building or any part of a building insured
                          under this Coverage Part, if the collapse is caused by one
                          or more of the following:

                                ...

                          (b) Decay that is hidden from view, unless the presence of
                              such decay is known or should reasonably have been
                              known to an insured prior to collapse[.]

        J.A. 52. Blissful reasons that the Collapse Extension provides coverage for its loss because

        the collapse of the underground storm-drain pipe was caused by hidden decay. Cincinnati

                                                       6
USCA4 Appeal: 19-2217      Doc: 41         Filed: 10/11/2022      Pg: 7 of 8

        counters that, even assuming the correctness of Blissful’s posited causal chain, the Collapse

        Extension does not cover this loss because underground pipes are not “Covered Property”

        for purposes of the Collapse Extension.

               As previously explained, the Building and Personal Property Coverage Form

        specifically excludes underground pipes from the definition of “Covered Property.”

        Subsection 3 of the Underground Property Extension amends that provision to include

        underground pipes attached to covered property, but only “[f]or this Coverage Extension.”

        J.A. 114. We agree with the district court that the phrase “[f]or this Coverage Extension”

        shows the drafters of the policy intended for the specified substitution to apply only to the

        Underground Property Extension and not to other extensions, like the Collapse Extension.

        In other words, subsection 3 amends the definition of “Covered Property” to include

        underground pipes attached to covered property only for purposes of the Underground

        Property Extension. Misreading subsection 3 to amend the policy for all purposes would

        contravene the text of the Underground Property Extension by “applying one of its special

        provisions to the [p]olicy as a whole.” Blissful Enters., Inc. v. Cincinnati Ins. Co., 421 F.

        Supp. 3d 193, 200 (D. Md. 2019).

               This conclusion does not render the underground pipes provision of the

        Underground Property Extension illusory. See Bailer v. Erie Ins. Exch., 687 A.2d 1375,

        1380 (Md. 1997) (holding coverage grant illusory because an exclusion “totally

        swallow[ed] the insuring provision”); Harleysville Preferred Ins. Co. v. Rams Head Savage

        Mill, LLC, 187 A.3d 797, 817–818 (Md. Ct. Spec. App. 2018) (holding exclusion did not

        render coverage illusory because some claims would be covered). Cincinnati identifies

                                                     7
USCA4 Appeal: 19-2217      Doc: 41          Filed: 10/11/2022      Pg: 8 of 8

        various causes of loss to underground pipes attached to covered property that would be

        covered by the Underground Property Extension even though losses caused by collapse

        and hidden decay are not covered.

              Finally, we agree with the district court that, if estoppel is available in this context,

        Blissful has not offered evidence of detrimental reliance sufficient to create a genuine

        dispute of material fact. See Rubinstein v. Jefferson Nat’l Life Ins. Co., 302 A.2d 49, 52

        (Md. 1973) (“One asserting the benefit of an estoppel must have been misled to his injury

        and have changed his position for the worse, having believed and relied on the

        representations of the party sought to be estopped.”). Blissful has not identified any

        evidence that it relied to its detriment on the claims specialist’s February 2016

        representation that Cincinnati would cover this loss. Although Blissful obtained an

        estimated cost of repairs from Comer Construction before Cincinnati changed its position,

        Blissful would have needed an estimate regardless, and it has not shown that obtaining the

        estimate was detrimental in any way.

              Accordingly, for these reasons we affirm the district court’s order granting summary

        judgment to Cincinnati and denying Blissful’s cross-motion for the same.

                                                                                         AFFIRMED

                                                      8