NG Investments LLC v. Atain Specialty Insurance Co ( 2022 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 21-2992
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NG INVESTMENTS, LLC; FRONT ST INVESTMENTS, LLC,
Appellants
v.
ATAIN SPECIALTY INSURANCE COMPANY
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On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2:21-cv-01667)
District Judge: Hon. Paul S. Diamond
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Submitted Under Third Circuit L.A.R. 34.1(a)
(November 15, 2022)
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Before: HARDIMAN, RESTREPO, and PORTER,
Circuit Judges
(Filed: November 29, 2022)
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OPINION ∗
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∗
This disposition is not an opinion of the full court and, pursuant to I.O.P. 5.7,
does not constitute binding precedent.
PORTER, Circuit Judge.
This case concerns the scope of an “all-risks” property insurance policy. NG
Investments and Front St Investments bought a policy for 2204 Ridge Avenue from Atain
Specialty Insurance. The insureds filed a claim for damage sustained when the adjacent
building collapsed. Atain denied the claim. The District Court granted summary
judgment for Atain because “the Policy nowhere provides coverage for damage caused
by the collapse of an uninsured structure.” J.A. 7. The insureds have not demonstrated a
genuine dispute of fact material to that conclusion, so we will affirm.
I
NG Investments and Front St Investments bought an Atain insurance policy for
2204 Ridge Avenue. Under the policy, Atain “will pay for direct physical loss of or
damage to Covered Property at the premises described in the Declarations caused by or
resulting from any Covered Cause of Loss.” J.A. 36. “Covered Causes of Loss means
Risks Of Direct Physical Loss unless the loss is” excluded or limited. J.A. 60.
There is one relevant exclusion. Atain “will not pay for loss or damage caused by
or resulting from . . . Collapse, except as provided . . . in the Additional Coverage for
Collapse.” J.A. 61, 62. The policy further limits the exclusion: “But if collapse results in
a Covered Cause of Loss at the described premises, we will pay for the loss or damage
caused by that Covered Cause of Loss.” J.A. 62.
In May 2021, the abutting building at 2206 Ridge Avenue collapsed. The insureds
filed a claim for damage that 2204 sustained to the second-floor kitchen and hallway. The
insureds argue that 2204 sustained damage from 2206 when “flying debris from that
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building struck the exterior of Plaintiffs’ buildings.” Appellants’ Opening Br. 7. Atain
denied coverage. It informed the insureds that damage from a collapse is a Covered
Cause of Loss only when the collapsed building is also insured under the policy. Because
the policy did not cover 2206, Atain determined it was not obligated to pay for damage
caused by 2206’s collapse.
The insureds filed suit in state court for breach of contract. Atain removed the case
to the District Court for the Eastern District of Pennsylvania. The parties conducted
discovery for two months. Atain then filed its motion for summary judgment, which the
District Court granted. The insureds appealed.
II 1
This Court reviews grants of summary judgment de novo, applying the same
standard as the District Court. Pichler v. UNITE, 542 F.3d 380, 385 (3d Cir. 2008). “The
court shall grant summary judgment 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 the moving party has provided evidence to support summary
judgment, the nonmoving party cannot rest on its allegations. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 249 (1986). “The mere existence of a scintilla of evidence in support
of the plaintiff’s position will be insufficient; there must be evidence on which the jury
could reasonably find for the plaintiff.” Id. at 252.
1
The District Court had jurisdiction under 28 U.S.C. §§ 1332 and 1441. This
Court has jurisdiction over this appeal under 28 U.S.C. § 1291.
3
III
This case presents a straightforward question of contract interpretation: whether
the damage caused when the building at 2206 Ridge Avenue collapsed is covered by the
policy. The District Court correctly decided that there was no coverage because the
undisputed facts show that the damage was caused by collapse, an excluded cause, and
not a Covered Cause of Loss.
In insurance coverage disputes, we conduct a burden-shifting exercise to
determine whether insurers must pay claims under an insurance contract. First, the
insured must show that its claim falls within the policy’s grant of coverage. State Farm
Fire & Cas. Co. v. Estate of Mehlman, 589 F.3d 105, 111 (3d Cir. 2009). The insurer
may then demonstrate that a separate provision excludes coverage. Id.The insureds posit their damage was caused by “flying debris that occurred when a
third-party building fell down.” Appellants’ Opening Br. 19–20. They contend that flying
debris is a Covered Cause of Loss. Under the policy, “if collapse results in a Covered
Cause of Loss at the described premises, [Atain] will pay for the loss or damage.” J.A.
62. The insureds conclude that their all-risks policy covered the damage and that the
collapse exclusion does not apply.
The problem for the insureds is that Atain provided evidence that 2206’s collapse,
and not flying debris, caused the damage. Before the insureds initiated their case in state
court, their adjuster asserted that 2204 sustained damage when 2206 “collapsed and fell
onto” 2204. 21-cv-1667, Doc. 13-8, at 3. The insureds speculated about other causes but
provided no evidence. They quoted an affidavit declaring that the damage was caused by
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flying debris. The District Court correctly ignored that affidavit because it was not in the
record. On appeal, they cite the complaint and their response to Atain’s Statement of
Undisputed Material Facts to create a genuine dispute as to the cause of the damage. But
a plaintiff cannot rest on its complaint when opposing a properly supported motion for
summary judgment, Anderson, 477 U.S. at 249, and their response does not cite evidence
supporting their flying-debris theory of causation. So the District Court correctly
disregarded the insureds’ unsupported factual allegations and found no genuine dispute
that 2206’s collapse caused 2204’s damage. 2 J.A. 6.
The sole question that remains is whether 2206’s collapse is a Covered Cause of
Loss. It is not. When interpreting insurance contracts, we “ascertain the intent of the
parties as manifested by the language of the written instrument.” Madison Constr. Co. v.
Harleysville Mut. Ins. Co., 735 A.2d 100, 106 (Pa. 1999) (quoting Gene & Harvey
Builders v. Pa. Mfrs. Ass’n, 517 A.2d 910, 913 (Pa. 1986)). Only when a policy is
ambiguous do we construe it in favor of the insured. 3 Id.In this policy, “Covered Causes of Loss means Risks Of Direct Physical Loss
unless the loss is: Excluded . . . or Limited.” J.A. 60. The policy unambiguously excludes
collapse as a Covered Cause of Loss when it says, “We will not pay for loss or damage
2
Because the undisputed evidence shows that the damage was caused by 2206’s collapse
and not flying debris, the collapse did not cause a Covered Cause of Loss. The exception
to the collapse exclusion is not implicated here.
3
The insureds assert that the District Court’s interpretation of the policy is contrary to
their reasonable expectations of coverage. A single conclusory statement does not
adequately present an argument. Even if it did, the insureds have not cited any evidence
of their expectations, so we cannot evaluate those expectations for reasonableness.
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caused by . . . Collapse, except as provided below in Additional Coverage for Collapse.”
J.A. 61, 62. The additional coverage applies only if the collapse is of an insured building,
which is not the case here. See J.A. 65. As a result, 2206’s collapse is an excluded cause
not saved by the additional coverage provision.
The insureds assert that this interpretation of the collapse provision is overly
broad. In their reading of the policy, Atain is not required to pay for damage if the
insured building collapses, but it is required to pay for damages to the insured building if
another building collapses. To reach that conclusion, the insureds insert language into the
collapse exclusion. See Appellants’ Opening Br. 22 (the exclusion “means that Defendant
will not pay for the collapse of the Covered Property”). Because we decline to do so,
we reject the insureds’ interpretation.
IV
Because the insureds provided no evidence that the damage to the building at 2204
Ridge Avenue resulted from a Covered Cause of Loss, the District Court correctly held
that there was not a genuine dispute of material fact and that Atain was entitled to
judgment as a matter of law. We will affirm.
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