131_C104

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WATER EXCLUSION BARRED COVERAGE BECAUSE FLOOD CAUSED THE LOSS, NOT EXPLOSION

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Warren Brook runs parallel to Route 123 in New Hampshire. Cooper Hill Road runs perpendicular to and intersects Route 123 near Alstead. Warren Brook passes under Cooper Hill Road through a culvert. In October 2005, this area in New Hampshire experienced extremely heavy rainfall amounts in a short period of time. The culvert under Cooper Hill Road could not handle the increased volume in Warren Brook and the area uphill from the road quickly filled with an extraordinary amount of water, causing the elevated road to act as a temporary dam, acting to hold back increasing amounts of water. The water burst through the road near the culvert and released a surge of water into the valley below that damaged Joseph Bates' (Bates) real and personal property located on Forest Road. Phenix Mutual Fire Insurance Company (Phenix) insured Bates.

 

Bates brought an action claiming damages, asserting that the road exploded as a result of water pressure and directly caused the damage to his property. Phenix moved for summary judgment, stating that there was no coverage because the proximate cause of loss was flood, not explosion. Bates filed his own cross-motion for summary judgment. The trial court granted Phenix's motion and ruled that the collapse of the road was not an explosion. It stated that, regardless of whether the term explosion applies to the facts of the case, the damage was caused entirely by water, an excluded cause, and was not proximately caused by explosion.

 

Bates appealed and argued that the trial court erred in holding that the failure of the roadway was not caused by an explosion under the policy provisions, in finding that the loss was not subject to the ensuing loss provision, and in finding that the water exclusion applied to the loss. Bates took the position that the failure of the culvert under the road and its eventual collapse was an explosion caused by the sudden release of energy in the form of the movement of water. He also argued that the term is susceptible to more than one interpretation and that the policy must therefore be construed in his favor. Phenix countered by stating that explosion does not apply where natural elements acted over time to overwhelm and overflow the culvert, in addition to pointing out that coverage did not apply to loss or damage caused directly or indirectly by water.

 

The Supreme Court did not address the trial court's conclusion that the term explosion did not include the factual circumstances in this case and declined to find coverage because it agreed with its other conclusion. That was, regardless of whether the failure of the culvert and the road could be characterized as an explosion, that coverage did not apply because the loss was caused by flood. The policy language specifically excluded loss or damage caused directly or indirectly by water, regardless of any other cause or event that contributed concurrently or in any sequence to the loss. Bates did not argue that his property was damaged by anything other than water. For this reason, even if the water had caused fire, explosion or sprinkler leakage and would respond to the resulting damage to his property, there was no damage caused by, for example, dirt, rocks or broken pavement from the collapse. The Supreme Court agreed with and affirmed the trial court's conclusion that the loss or damage was caused by water, an excluded cause of loss, that as a result coverage did not apply, and that it correctly granted Phenix's motion for summary judgment.

 

Supreme Court of New Hampshire. Joseph Bates v. Phenix Mutual Fire Insurance Company. No. 2007-177. Argued: Oct. 18, 2007. Opinion Issued Feb. 13, 2008. 156 N.H. 719, 943 A.2d 750