York Insurance Company v. Williams Seafood of Alba , 223 F.3d 1253 ( 2000 )

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
AUGUST 18, 2000
No. 99-14419
THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 1:95-CV-114-2
YORK INSURANCE COMPANY,
Plaintiff-Appellee,
versus
WILLIAMS SEAFOOD OF ALBANY, INC.,
WEBB PROPERTIES, INC., and
OXFORD CONSTRUCTION COMPANY, INC.
Defendants-Appellants.
________________________
Appeal from the United States District Court
for the Middle District of Georgia
_________________________
(August 18, 2000)
Before TJOFLAT, WILSON and FLETCHER*, Circuit Judges.
_________________________
*Honorable Betty B. Fletcher, U.S. Circuit Judge for the Ninth Circuit, sitting by
designation.
WILSON, Circuit Judge:
CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR
THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF GEORGIA,
PURSUANT TO O.C.G.A. § 15-2-9.
TO THE SUPREME COURT OF GEORGIA AND ITS HONORABLE
JUSTICES:
Williams Seafood of Albany, Inc., Webb Properties, Inc., and Oxford
Construction Company, Inc. (“Williams”) appeal a declaratory judgment granted to
York Insurance Company (“York”) after a bench trial. Since the dispositive
question is unsettled under Georgia law, we certify its resolution to the Georgia
Supreme Court.
I. BACKGROUND
York issued a policy of insurance to Williams covering Williams’s
restaurant. The policy excluded losses or damage stemming directly or indirectly
from floods, but specifically covered losses stemming from sinkhole collapses.
Sometime during or immediately after a flood, Williams’s building collapsed into a
sinkhole and suffered a total loss. Williams filed a claim with York for the loss,
which York denied because its investigation revealed that the loss was caused
directly or indirectly by the flood. York then sued for a declaratory judgment that
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the loss was not covered, and Williams counterclaimed seeking coverage for its
loss.
The parties agreed that the sinkhole collapse caused the property damage,
but disputed whether the flood contributed to the sinkhole collapse. The district
court ruled that the policy clearly excluded coverage for any damages resulting
from flood, and held a bench trial to determine whether the flood directly or
indirectly caused Williams’s claimed loss. After trial, the district court found that
the “greater weight” of trial testimony and evidence “supports the finding that the
loss suffered by [Williams] was directly or indirectly caused by flood water . . . .”
Therefore, the court granted York a declaratory judgment absolving York of all
liability for Williams’s collapsed building loss. Williams appeals.
II. DISCUSSION
This case turns on whether the insurance policy’s flood exclusion trumps its
additional sinkhole collapse coverage provision. Several principles of contract
construction under Georgia law guide this inquiry. First, the insurance policy
should “be considered as a whole and each provision is to be given effect and
interpreted so as to harmonize with the others.” Boardman Petroleum, Inc. v.
Federated Mut. Ins. Co., 498 S.E.2d 492, 494 (Ga. 1998). If the terms of an
insurance contract are “unambiguous, clear, and capable of only one reasonable
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construction, they must be taken in their plain, ordinary and popular sense as may
be supplied by common dictionaries.” Lemieux v. Blue Cross & Blue Shield, 453
S.E.2d 749, 751 (Ga. Ct. App. 1995). In construing the policy, “[t]he test is not
what the insurer intended its words to mean, but what a reasonable person in the
position of the insured would understand them to mean. The policy should be read
as a layman would read it and not as it might be analyzed by an insurance expert or
an attorney.” United States Fire Ins. Co. v. Hilde, 322 S.E.2d 285, 288 (Ga. Ct.
App. 1984) (citations omitted).
If, however, an insurance policy is confusing to a layman, the policy is
ambiguous. See Isdoll v. Scottsdale Ins. Co., 466 S.E.2d 48, 50 (Ga. Ct. App.
1995). If a policy is ambiguous, the policy shall be construed against the drafter.
See id. York bears the burden of proving that the flood exclusion applies. See
Nationwide Mut. Fire Ins. Co. v. Rhee, 287 S.E.2d 257, 260 (Ga. Ct. App. 1981).
“Exceptions, limitations and exclusions to insuring agreements require a narrow
construction on the theory that the insurer, having affirmatively expressed
coverage through broad promises, assumes a duty to define any limitations on that
coverage in clear and explicit terms.” Alley v. Great Am. Ins. Co., 287 S.E.2d 613,
616 (Ga. Ct. App. 1981). “[E]xclusions will be ‘strictly construed against the
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insurer and in favor of coverage.’” Quesada v. Director, FEMA, 753 F.2d 1011,
1014 n.4 (11th Cir. 1985) (citations omitted).
The conflicting insurance policy sections are as follows:
B. EXCLUSIONS
1. We will not pay for loss or damage caused directly or indirectly by
any of the following. Such loss or damage is excluded regardless of
any other cause or event that contributes concurrently or in any
sequence to the loss.
....
g. Water
(1) Flood, surface water. . . .
....
D. ADDITIONAL COVERAGE - COLLAPSE
We will pay for loss or damage caused by or resulting from risks of
direct physical loss involving collapse of a building or any part of a
building caused only by one or more of the following:
1. The “specified causes of loss” or breakage of building glass, all
only as insured against in this Coverage Part. . . .
....
F. DEFINITIONS
“Specified Causes of Loss” means the following: . . . sinkhole
collapse . . . .
1. Sinkhole collapse means the sudden sinking or collapse of land
into underground empty spaces created by the action of water
on limestone or dolomite.
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Several interpretations of the conflicting policy provisions are reasonable.
Williams urges us to rule that the “additional coverage” provision is additional to
and separate from the other portions of the contract (namely, the Section B
exclusions). Therefore, losses stemming from a sinkhole collapse always would be
covered, no matter what contributed to the sinkhole collapse. York, on the other
hand, argues that losses stemming from a flood are always excluded as per Section
B(1), even if the flood merely contributes to an otherwise covered cause (such as a
sinkhole collapse). Thus, according to York, the Section B flood exclusion and the
Section D sinkhole collapse coverage provisions do not even conflict; flood
damage is always excluded, but sinkhole collapse damage is only covered if no
excluded causes contributed to the sinkhole collapse.
Each argument, although plausible, has potential weaknesses. For example,
if Williams prevails, the policy exclusion for losses stemming from floods is
arguably rendered superfluous. Alternatively, if the insurer prevails, the additional
sinkhole collapse coverage is worth nothing, since all sinkholes could arguably be
blamed on some excluded precipitating cause (no matter how remote).
Williams argues that Ovbey v. Continental Ins. Co., 613 F. Supp. 726 (N.D.
Ga. 1985), aff’d 782 F.2d 178 (11th Cir. 1986) (without opinion) controls. In
Ovbey, the court looked to the immediate and proximate cause of the collapse of
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the building to determine whether the loss was covered. Applying Ovbey to the
facts at hand, the sinkhole collapse was the proximate cause, and the flood was a
contributory cause. Hence, the loss would be covered.
York distinguishes Ovbey on the ground that the policy in Ovbey did not
contain the critical language found in the present policy, to wit: “Such [flood] loss
or damage is excluded regardless of any other cause or event that contributes
concurrently or in any sequence to the loss.” (emphasis added). York instead
points to Underwood v. United States Fidelity & Guar. Co., 165 S.E.2d 874 (Ga.
Ct. App. 1968) to support its position that policy exclusions must be given effect
even if other causes contribute to the loss. However, in Underwood, no “additional
coverage” provision conflicted with the exclusion provision, as with the present
situation. Thus, no Georgia caselaw definitively answers the question before us.
Because there is no controlling Georgia law on this issue, we certify the
following question to the Georgia Supreme Court: Where the “exclusions”
section of an insurance policy excludes coverage for damage resulting directly
or indirectly from floods, but the “additional coverage - collapse” section
specifically includes sinkhole collapse damage, does the policy cover damage
produced by a sinkhole collapse that was precipitated by a flood?
III. CONCLUSION
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We certify the above-styled question to the Georgia Supreme Court. The
phrasing used in this certified question should not restrict the Supreme Court's
consideration of the problem posed by this case. This extends to the Supreme
Court's restatement of the issues and the manner in which the answer is given. To
assist the Supreme Court's consideration of the case, the entire record, along with
the briefs of the parties, shall be transmitted to the Supreme Court of Georgia.
QUESTION CERTIFIED.
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