PHILADELPHIA – The Superior Court has upheld a March 2016 ruling that an insurance company did not breach its contract with a property owner.
The Ridgewood Group appealed summary
judgment in favor of the plaintiffs Millers Capital Insurance in the Philadelphia County Court of Common Pleas. The original judgment dismissed Ridgewood’s complaint of breach of insurance contract and
Ridgewood argued in its appeal that the trial court made an error by applying a groundwater damage exclusion in the policy in question.
Ridgewood purchased an "all risk" insurance policy from
Millers to cover its residential rental properties. The policy covered water
damage but did not cover damage caused by flood, surface water, waves,
overflow of bodies of water, etc.
The plan also didn’t cover damage caused by
faulty maintenance work. However, the policy covered faulty maintenance damage.
The property at issue sustained water damage in its basement in March 2014.
Equipment was damaged as well. Both parties agreed a rain storm was the cause of the damage.
The water traveled from the roof to a window well, then to the
basement. Millers denied coverage for the damage, citing surface water and negligence
as the exclusion in the policy.
Ridgewood filed a lawsuit stating breach of contract and bad
faith. As a result of the lawsuit brought against it, Millers filed a motion
for summary judgment. It argued that Ridgewood’s claim was clearly not
covered in the policy and that it had made the policy very clear to Ridgewood.
The trial court agreed with Millers, as did the Superior Court.
During the appeal, Millers doubled down on its motion for summary judgment argument that
“the state of disrepair from the failure to maintain the roof, gutters and
downspouts allowed rainwater and melting snow to overflow the debris clogged
gutter and to flow into the air well and enter the basement.”
The Superior Court concluded that "ground water" does not include rain water
that travels from the roof to a basement though drainage pipes or other
channels connected to a house. Because of this, it concluded that the trial
court did not make a mistake in determining that the policy’s "negligent work
exclusion" prevented insurance coverage, upholding the ruling.