James L. Vanderburg and Sarah Vanderburg v. Allstate Insurance Company

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CA 04-731

April 6, 2005







David M. Glover, Judge

The appellants in this case, James and Sarah Vanderburg, are appealing the trial court's grant of summary judgment to appellee, Allstate Insurance Company. They argue that paragraphs four and fifteen of their "Deluxe Homeowner's Policy" insurance contract with Allstate, when read together, are ambiguous as to the question of covered and non-covered damages caused by water; they also argue that the policy is ambiguous as it relates to the phrase "within your dwelling" in paragraph fifteen. We affirm the trial court's grant of summary judgment to Allstate.

In May 2001, appellants noticed running water coming out from around their home's foundation. Upon investigation, it was determined that the water was not coming from incoming water lines, and appellants filed a claim with Allstate. Upon further investigation by appellants, it was determined that the water was coming from a pipe underneath the slab foundation in the kitchen area. Appellants paid a plumber to repair the water leak, and they also incurred other costs, including a payment to West Memphis

Utilities and the cost of replacing the kitchen tile. In July 2001, they made demand upon Allstate for the cost of tearing out and replacing the portion of their home affected by the water leak; Allstate denied this claim.

The Vanderburgs then filed suit against Allstate, and Allstate moved for summary judgment, arguing that the damages were excluded from the Vanderburgs' coverage and that no genuine issue of material fact existed. After a hearing, the trial judge granted Allstate's motion for summary judgment, and appellants now bring this appeal.

In Carver v. Allstate Insurance Company, 77 Ark. App. 296, 300-01, 76 S.W.3d 901, 903-04 (2002), this court set forth the standard of review utilized in reviewing a grant of summary judgment with regard to an insurance contract:

Summary judgment is a remedy that should be granted only when there are no genuine issues of fact to litigate and when the case can be decided as a matter of law. Once the movant has made a prima facie showing of entitlement to summary judgment, the responding party must demonstrate that there remain genuine issues of material fact to preclude a summary judgment. Our review is limited to a determination as to whether the trial court was correct in finding that no material facts were disputed.

When the terms of a written contract are ambiguous, the meaning of the contract becomes a question of fact. In order to be ambiguous, a term in an insurance policy must be susceptible to more than one equally reasonable construction. On motion for summary judgment, the court, viewing the evidence in the light most favorable to the nonmoving party, ascertains the plain and ordinary meaning of the language in the written instrument, and if there is any doubt about the meaning, there is an issue of fact to be litigated. When the intent of the parties as to the meaning of a contract is in issue, summary judgment is particularly inappropriate.

Under Arkansas law, the intent to exclude coverage in an insurance policy should be expressed in clear and unambiguous language, and an insurance policy, having been drafted by the insurer without consultation with the insured, is to be interpreted and construed liberally in favor of the insured and strictly against the insurer. If the language in a policy is ambiguous, or there is doubt or uncertainty as to its meaning and it is fairly susceptible of two or more interpretations - one favorable to the insured and the other favorable to the insurer - the one favorable to the insured will be adopted.

When contractual language is unambiguous, however, its construction is a question of law for the court. If the language is not ambiguous, it is unnecessary to resort to the rules of construction. When the language is clear, it must be given its plain and obvious meaning and should not be interpreted to bind an insurer to a risk which it plainly excluded and for which a premium was not collected.

(Citations omitted.)

The exclusion section of the insurance contract in question provided in pertinent part:

Losses We Do Not Cover Under Coverages A and B:

We do not cover loss to the property described in

Coverage A - Dwelling Protection or

Coverage B - Other Structures Protection consisting of or caused by:

. . . .

4. Water or any other substance on or below the surface of the ground, regardless of its source. This includes water or any other substance which exerts pressure on, or flows, seeps or leaks through any part of the residence premises.

. . . .

In addition, we do not cover loss consisting of or caused by any of the following;

15. a) wear and tear, aging, marring, scratching, deterioration, inherent vice, or latent defect;

b) mechanical breakdown;

c) growth of trees, shrubs, plants or lawns whether or not such growth is above or below the surface of the ground;

d) rust or other corrosion, mold, wet or dry rot;

e) contamination, including, but not limited to the presence of toxic, noxious, or hazardous gases, chemicals, liquids, solids or other substances at the residence premises or in the air, land or water serving the residence premises;

f) smog, smoke from the manufacturing of any controlled substance, agricultural smudging and industrial operations;

h) insects, rodents, birds or domestic animals. We do cover the breakage of glass or safety glazing materials caused by birds; or

i) seizure by government authority.

If any of (a) through (h) cause the sudden and accidental escape of water or steam from a plumbing, heating or air conditioning system, household appliance or fire protective sprinkler system within your dwelling, we cover the direct physical damage caused by the water or steam. If loss to covered property is caused by water or steam not otherwise excluded, we will cover the cost of tearing out and replacing any part of your dwelling necessary to repair the system or appliance. This does not include damage to the defective system or appliance from which the water escaped.

(Emphasis in original.)

The Vanderburgs argue on appeal, as they did below, that paragraphs four and fifteen, when read together, create an ambiguity as to what is covered and what is excluded when the residence premises are damaged by water. They argue that "when an insurance company requires its customers to refer back and forth between paragraphs there is an ambiguity and therefore a question for the jury." We disagree.

In Carver v. Allstate Insurance Company, supra, this court held that the paragraph-four exclusion, which is identical to the paragraph-four exclusion in the present case, "clearly and unambiguously indicate[d] that damage from any water on or below the surface which flows into the premises is not covered by the policy, regardless of whether the source is natural or artificial." 77 Ark. App. at 302, 76 S.W.3d at 905. Although the water that caused the damage in the Carver case originated from a burst Little Rock Municipal Water Works water main, and the water in the case at bar originated from a pipe underneath the slab foundation of appellants' home, we hold that the exclusion in paragraph four of the policy is controlling in this case as well, as it is undisputed that the water in this case came from under the ground. We further hold that paragraph fifteen has no application in this situation, because it concerns a loss to covered property caused by water or steam that is not otherwise excluded, and that paragraph four clearly and unambiguously excludes the damages suffered by the appellants in this case.

Due to the disposition of appellants' first point of appeal, we need not address appellants' second point concerning what is meant by the phrase "within the dwelling" found in paragraph fifteen. We hold that the trial court did not err in entering summary judgment for Allstate.


Bird and Roaf, JJ., agree.