New York Appeals Court Holds Homeowners Policy Excludes Coverage for Claimed Damage to Policyholder's Swimming Pool: Anti-Concurent Causation Language Considered
October, 2009
In July, 2009, a New York appeals court held in Jahier v. Liberty Mutual Group, 64 A.D.3d 683, 883 N.Y.S.2d 283 (2009), that the homeowners insurance policy's "water damage exclusion" applied to exclude coverage for damage to the insureds' "in-ground swimming pool, the surrounding patio area, and the plumbing which serviced the pool [that] sustained damage when the pool lifted up several inches out of the ground." 64 A.D.3d at 684. When the claimed damage occurred, the pool was empty, "as it had been drained by a contractor hired ... to perform maintenance." Id. at 684. The policyholders presented a claim for the damage to their pool and related property; the carrier, however, denied coverage pursuant to the "Earth Movement" and "Water Damage" clauses. Id. The trial court ordered that the insurer was "obligated to provide coverage," but New York's Appellate Division, Second Department, in Jahier reversed. Id. at 683.
The Jahier court applied bedrock principles used to interpret an insurance policy in its rationale:
‘Courts bear the responsibility of determining the rights or obligations of parties under insurance contracts based on the specific language of the policies' ... An exclusion from coverage ‘must be specific and clear in order to be enforced' ... An ambiguity in an exclusionary clause must be construed most strongly against the insurer ... However, ‘the plain meaning of the policy's language may not be disregarded to find an ambiguity where none exists' ... Where an insurer denies coverage based upon an exclusion, the burden is on the insurer to demonstrate that the exclusion applies in the particular case and that it is ‘subject to no other reasonable interpretation' ... Id. at 684-85. (Internal citations omitted.)
The policy's "Water Damage" exclusion in Jahier excluded loss caused "'directly or indirectly' by ‘[w]ater damage, meaning ... [w]ater below the surface of the ground, including water which exerts pressure on ... a building ... swimming pool or other structure.'" Id. at 685. And, the policy excluded such damage "'regardless of any other cause or event contributing concurrently or in any sequence to the loss.'" Id. The court stated that the policyholders' claim "was attributable to the subsurface water pressure that was exerted upon the empty swimming pool, even though it was precipitated by the drainage of the pool and heavy rainfall." Id.
Although the court in Jahier does not provide extensive commentary regarding the application of the policy's exclusion to the claimed damage, it appears - based on the court's implicit recognition that factors other than subsurface water pressure were involved - that the policy's anti-concurrent causation language played a role in the decision to reverse the trial court's entry of summary judgment in favor of the policyholder. The Jahier court held that the carrier was "not obligated to provide coverage for the loss sustained by the [policyholders] pursuant to the homeowners insurance policy issued by it ..." Id. at 686.
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