Aetna Casualty v. Greystar Captl Prt ( 2001 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 00-21000
Summary Calendar
AETNA CASUALTY & SURETY COMPANY,
Plaintiff-Appellee,
versus
GREYSTAR CAPITAL PARTNERS L.P.; ET AL.,
Defendants,
BROOKHOLLOW VENTURE LTD., doing business as
Cinnamon Square Apartments,
Defendant-Appellant.
Appeal from the United States District Court
For the Southern District of Texas
(H-98-CV-1585)
June 22, 2001
Before HIGGINBOTHAM, WIENER, and BARKSDALE, Circuit Judges.
PER CURIAM:*
Appellant Brookhollow Venture Ltd. appeals from a grant of
summary judgment in favor of appellee Aetna Casualty & Surety Co.
declaring that Aetna has no duty to indemnify Brookhollow for
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion
should not be published and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.
damage to the foundations and interiors of its Cinnamon Square
Apartments. We affirm.
I
Brookhollow owns and Greystar manages the Cinnamon Square
Apartments in Harris County, Texas. Both were insureds under an
all risk policy covering the Cinnamon Square Apartments issued by
Aetna. When Greystar discovered that several units of the
apartments had sunk and their floors were uneven, Brookhollow
investigated and discovered that plumbing leaks had caused the
subsidence of the units’ foundations and damage to the buildings’
interiors. Apparently, an underground pipe leak had caused the
earth beneath some apartment buildings to swell, which in turn
caused shifting of the foundations of the buildings.
Brookhaven sought coverage for the damage under its all risks
policy with Aetna. In response, Aetna sued for a declaratory
judgment of no duty to indemnify. The district court granted
summary judgment to Aetna with respect to the damage to the
foundations and interiors.1 The district court dismissed the
remaining claims, including all of the claims involving Greystar,
pursuant to a settlement. The district thus entered a final
judgment, and Brookhollow appealed.
II
1
The parties had raised several other claims, including claims for
plumbing repairs and extra-contractual claims.
2
We review the grant of summary judgment de novo. There are no
material factual disputes. Aetna concedes, for purposes of its
summary judgment motion, that the damage to the apartments was
caused by a pipe leak that caused the ground underneath the
apartments to either swell or subside, which in turn caused the
shifting of the foundations. The dispute is over the
interpretation of the insurance policy, which is a question of law.
Under Texas law, we apply the same rules of construction
governing other contracts.2 We enforce unambiguous text as
written. If, however, the contract is subject to two or more
reasonable interpretations, it is ambiguous, and we must construe
the policy language strictly in favor of the insured.3
In this case, the policy “insures against all risks of direct
physical loss to the insured property from any external cause
except as hereinafter excluded.” The relevant exclusion, called
Exclusion J, excludes “loss caused by or resulting from . . .
settling, cracking, bulging, shrinking or expansion of pavements,
foundations, walls, floors, roofs or ceilings.”
Following Texas law, as we must, we hold that Exclusion J
unambiguously excludes Brookhaven’s loss. Texas courts have
repeatedly held that exclusions virtually identical to Exclusion J
remove coverage for damages from settling or sinking of
2
See Balandran v. Safeco Ins. Co. of America, 972 S.W.2d 738, 740-41 (Tex.
1998).
3
See id. at 741.
3
foundations, even if the settling or sinking is caused by some
external force.4 As one Texas court stated, “The fact that the
settling of the foundation and the cracking of the walls and
foundation were brought about by a water leak is immaterial.”5
Thus, Aetna’s concession that the water leak was the ultimate cause
of the loss is immaterial. Since the settling of the foundation is
the source of the loss, Exclusion J applies, and Aetna has no duty
to indemnify Brookhollow for the damage to its apartments’
foundations and interiors.
III
Brookhollow argues that Exclusion J cannot apply here since
the exclusion of “loss caused by or resulting from . . . settling,
cracking, bulging, shrinking or expansion of pavements,
foundations, walls, floors, roofs or ceilings”6 cannot include loss
to pavements, foundations, walls, etc., because if Aetna had meant
“loss to” rather than “loss caused by or resulting from” it would
have said so. In support of this argument, Brookhollow points to
Limitation 10(C), which states that “pavements . . . are not
covered against loss caused by . . . pressure or weight of ice or
4
See Bentley v. Nat’l Std. Ins. Co., 507 S.W.2d 652, 654-55 (Tex. Civ.
App.—Waco 1974); see also Zeidan v. State Farm Fire & Casualty Co., 960 S.W.2d
663 (Tex. App.—El Paso 1997); Lambros v. Std. Fire Ins. Co., 530 S.W.2d 138, 140
(Tex. Civ. App.—San Antonio 1975).
5
General Ins. Co. of America v. Hallmark, 575 S.W.2d 134, 136 (Tex. Civ.
App.—Eastland 1979).
6
Emphasis added.
4
water.” Brookhollow argues that this exclusion would be surplusage
if Exclusion J covered loss to pavements, foundations, etc.
We disagree. Brookhollow’s reading of the policy fails to
make sense of the context in which these words appear. Brookhollow
ignores the fact that Exclusion J applies only to losses caused by
or resulting from “settling, cracking, bulging, shrinking or
expansion” of foundations. Thus, our reading of the policy does
not rewrite Exclusion J to exclude all damage to foundations; we
read its plain language to exclude only damages caused by settling,
cracking, and so on. Thus, to use Brookhollow’s examples, damage
to a foundation from a fallen tree or a car crash would not be
damage to the foundation “caused by or resulting from settling,
[etc.].”
By the same logic, Limitation 10(C) is not surplusage. It
adds “pressure or weight of ice or water” to the list of excluded
causes of loss to pavement. Further, Brookhollow takes Limitation
10(C) out of context. In context, it is clear that the limitation
is designed to exclude damage caused by wind, precipitation, or the
surging of surface water against structures near open water.7
IV
7
In its entirety, Limitation 10(C) reads, “Fences, pavements, outdoor
swimming pools and related equipment, retaining walls, bulkheads, piers, wharves
or docks are not covered against loss caused by freezing or thawing, impact of
watercraft, or by pressure or weight of ice or water whether driven by wind or
not.”
5
For the foregoing reasons, the judgment of the district court
is AFFIRMED.
6