Vasilli Katopothis v. Windsor-Mount Joy Mutual Insu

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Submitted September 18, 2017 Decided July 31, 2018
No. 16-7132
VASILLI KATOPOTHIS AND FRANCESCA DAHLGREN,
APPELLANTS
v.
WINDSOR-MOUNT JOY MUTUAL INSURANCE CO. AND R.W.
HOME SERVICES, INC., DOING BUSINESS AS GALE FORCE
CLEANING AND RESTORATION,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:14-cv-00380)
Glenn H. Silver was on the briefs for appellants. Erik B.
Lawson entered an appearance.
George D. Bogris was on the brief for appellee R.W. Home
Services, Inc., d/b/a Gale Force Cleaning and Restoration.
Charles B. Peoples was on the brief for appellee
Windsor-Mount Joy Mutual Insurance Co.
2
Before: GRIFFITH and KAVANAUGH,* Circuit Judges, and
SENTELLE, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge GRIFFITH.
GRIFFITH, Circuit Judge: Vasilli Katopothis and Francesca
Dahlgren (the “Dahlgrens”) own a beach home that flooded in
a plumbing accident while they were away. They sued their
insurance company for breach of contract when it refused to
cover the damage. They also sued their cleaning-and-
restoration company for failing to adequately remedy the
damage and prevent mold. The district court granted summary
judgment in favor of the insurance company based on the plain
language of the Dahlgrens’ insurance policy and transferred the
claims against the cleaning-and-restoration company to the
district court in Delaware for lack of personal jurisdiction. We
affirm both the grant of summary judgment and the transfer of
the claims.
I
A
In May 2000, the Dahlgrens, who reside in the District of
Columbia, purchased a beach home in Rehoboth Beach,
Delaware, where they spend most of their weekends. At all
times relevant to this litigation, the house was a second
residence and remained fully furnished with the accessories of
daily life, such as furniture, clothes, food, toiletries, and
medicine. When not at their beach home, the Dahlgrens
routinely left the heat on to prevent the pipes from freezing and
*
Circuit Judge Kavanaugh was a member of the panel at the
time the case was submitted but did not participate in this opinion.
3
asked a friend to check on the house and retrieve the mail. They
did not, however, shut off the water supply.
In February 2013, Ms. Dahlgren returned to the beach
home to find two inches of standing water throughout the main
level and additional water “gushing” from the ceiling overhead.
The Dahlgrens had been away for ten days, and, in their
absence, a pressurized hot water pipe in the upstairs bathroom
had separated at the joint and flooded the house.
The Dahlgrens notified their insurance company,
Windsor-Mount Joy Mutual Insurance Co. (“Windsor-
Mount”), about the flooding. They also contracted with R.W.
Home Services, Inc., doing business as Gale Force Cleaning
and Restoration (“Gale Force”), to remedy the damage and
prevent mold. According to the Dahlgrens, Gale Force was
negligent in its clean-up effort and mold spread through the
house, so the Dahlgrens eventually decided to tear it down and
build a new one.
The Dahlgrens timely filed an insurance claim with
Windsor-Mount to cover the damage from the accident. The
insurance company denied the claim because, while they were
away, the Dahlgrens had failed to shut off the water where it
entered the house.
B
The Dahlgrens sued Windsor-Mount for breach of
contract. They filed suit in the Superior Court of the District of
Columbia, but Windsor-Mount invoked federal diversity
jurisdiction and removed the case to the district court. See 28
U.S.C. §§ 1332(a), 1441(a). When Windsor-Mount impleaded
Gale Force as a third-party defendant, the Dahlgrens amended
their complaint to add claims against Gale Force as well for
4
breach of contract, negligence, negligent misrepresentation,
and violations of the Delaware Consumer Fraud Act, 6 Del.
Code §§ 2511-27. The Dahlgrens and Windsor-Mount then
filed cross-motions for summary judgment, and Gale Force
moved to be dismissed from the case for lack of personal
jurisdiction.
The district court determined that the Dahlgrens could not
recover under the clear terms of their insurance policy and
granted summary judgment against them on that issue. See
Katopothis v. Windsor-Mount Joy Mut. Ins. Co., 211 F. Supp.
3d 1, 14-21 (D.D.C. 2016). While the Dahlgrens argued that
Delaware law should apply and Windsor-Mount argued for
District of Columbia law, the district court was not put to the
choice because the insurance claim failed under the law of both
jurisdictions. See id. at 13-14; see also City of Harper Woods
Emps.’ Ret. Sys. v. Olver, 589 F.3d 1292, 1298 (D.C. Cir. 2009)
(“A federal court sitting in diversity applies the conflict of law
rules of the forum in which it sits.” (citing Klaxon Co. v. Stentor
Elec. Mfg. Co., 313 U.S. 487, 496 (1941))); USA Waste of Md.,
Inc. v. Love, 954 A.2d 1027, 1032 (D.C. 2008) (“A conflict of
laws does not exist when the laws of the different jurisdictions
are identical or would produce the identical result on the facts
presented.”).
Concluding the Dahlgrens did not allege sufficient
contacts between Gale Force and the District of Columbia to
establish personal jurisdiction, the district court also transferred
the Dahlgrens’ claims against Gale Force to the district court
in Delaware, where they have been stayed pending the outcome
of this litigation. Katopothis, 211 F. Supp. 3d at 21-27; see 28
U.S.C § 1406(a); Sinclair v. Kleindienst, 711 F.2d 291, 293-94
(D.C. Cir. 1983) (construing 28 U.S.C. § 1406(a) to authorize
transfer of venue for lack of personal jurisdiction).
5
The Dahlgrens appeal, arguing the district court
misconstrued their insurance policy under Delaware law and
erroneously transferred the claims against Gale Force. We
uphold the district court on both issues. And because we
conclude the Dahlgrens’ claim against Windsor-Mount fails
under Delaware law, and the Dahlgrens do not appeal the
judgment of the district court with regard to District of
Columbia law, we do not need to consider the choice-of-law
analysis further. See USA Waste of Md., 954 A.2d at 1032.
II
The district court had diversity subject-matter jurisdiction
over this case pursuant to 28 U.S.C. § 1332(a). The Dahlgrens
are citizens of the District of Columbia and allege $800,000 in
damages; Windsor-Mount is a Pennsylvania corporation with
its principal place of business in Pennsylvania; and Gale Force
is a Delaware corporation with its principal place of business
in Delaware. We have jurisdiction over this appeal pursuant to
28 U.S.C. § 1291 and review de novo issues of contract
interpretation, the grant of summary judgment, and challenges
to the exercise of personal jurisdiction. Bode & Grenier, LLP
v. Knight, 808 F.3d 852, 857, 862 (D.C. Cir. 2015) (contract
interpretation and summary judgment); FC Inv. Grp. LC v. IFX
Mkts., Ltd., 529 F.3d 1087, 1091 (D.C. Cir. 2008) (personal
jurisdiction).
III
A
The Dahlgrens’ homeowners insurance policy is a twenty-
seven page standard contract produced by the American
Association of Insurance Services. It provides coverage for
damage to both real and personal property resulting from
6
accidental discharge or leakage from the plumbing, subject to
specific exclusions. The cover page of the policy also lists a
number of endorsements included with the standard contract to
amend the terms of coverage. ML-508D is one of those
endorsements. ML-508D was approved by the Delaware
Insurance Commissioner and printed on a blue sheet of paper
to stand out from the rest of the policy.
It reads in full:
ADDITIONAL EXCLUSIONS FOR UNOCCUPIED
RESIDENCES
In addition to exclusions found elsewhere in your policy,
if the insured residence is vacant, unoccupied (meaning an
absence in excess of 72 hours), or under construction and
unoccupied, the insured must:
a. Maintain heat in the residence and shut off the
water supply where it enters the residence. If the
residence is heated by a hot water system, the
water supply to the heating system must be
maintained and the water supply to the rest of
the residence must be shut off.
OR
b. Shut off the water supply where it enters the
residence and completely empty liquids from
any plumbing, heating, air conditioning system,
water heater, or domestic appliance.
If this is not done, we do not pay for loss caused by freezing
of or discharge, leakage, or overflow from any plumbing,
heating, or air conditioning system or any appliance or
other equipment attached to it.
7
In other words, when the house remains unoccupied for more
than 72 hours, the homeowner must either leave the heat on and
shut off the water where it enters the house or shut off the water
where it enters the house and drain any remaining liquid from
the plumbing. Otherwise, ML-508D voids coverage for any
damage caused by plumbing discharge, leakage, or overflow.
B
According to Delaware law, “[W]here the language in
insurance contracts is unambiguous, the language is given its
plain and ordinary meaning.” Bermel v. Liberty Mut. Fire Ins.
Co., 56 A.3d 1062, 1070 (Del. 2012). An ambiguous insurance
policy “is typically construed against the drafter and in
accordance with the reasonable expectations of the insured.”
Id.; see also O’Brien v. Progressive N. Ins. Co., 785 A.2d 281,
288 (Del. 2001); Penn. Mut. Life Ins. Co. v. Oglesby, 695 A.2d
1146, 1149-50 (Del. 1997). But “a contract is only ambiguous
when the provisions in controversy are reasonably or fairly
susceptible to different interpretations” and “not . . . simply
because the parties do not agree on the proper construction.”
O’Brien, 785 A.2d at 288. Therefore, “[W]here the language of
a policy is clear and unequivocal, the parties are to be bound
by its plain meaning.” Id.
The Dahlgrens cannot recover under the clear and
unambiguous terms of their insurance policy. If their house
remained unoccupied “in excess of 72 hours,” the Dahlgrens
were required to “[m]aintain heat in the residence and shut off
the water supply where it enters the residence,” or else the plain
language of ML-508D excludes coverage for “loss caused
by . . . discharge, leakage, or overflow from any plumbing . . .
system.” There is no dispute the Dahlgrens were away from
their beach home for ten days and failed to shut off the water
supply where it entered the house. There is no question that the
8
damage for which they now seek coverage was caused by
flooding from the plumbing. It is a plain and simple matter that
they cannot recover from Windsor-Mount for their loss.
Nevertheless, the Dahlgrens offer several arguments for
why we should disregard the straightforward application of
ML-508D and grant them relief. None are persuasive.
The Dahlgrens first argue that the policy extends coverage
to real and personal property for damage that results from
plumbing accidents. They contend that this coverage cannot be
limited by a subsequent endorsement because doing so would
create conflicting contract terms or render the policy
ambiguous.
We disagree. By definition, endorsements amend the
terms of an insurance policy. See Endorsement, Black’s Law
Dictionary (10th ed. 2014) (“An amendment to an insurance
policy; a rider.”). That’s their very purpose. A policy is not
ambiguous or contradictory just because an endorsement
amends its provisions. See Intel Corp. v. Am. Guarantee &
Liab. Ins. Co., 51 A.3d 442, 447 & n.14 (Del. 2012); see also
Grinnell Mut. Reins. Co. v. Schwieger, 685 F.3d 697, 701 (8th
Cir. 2012) (“[W]here provisions in the body of the policy
conflict with an endorsement or rider, the provision of the
endorsement governs.” (quotation marks omitted)). The
Dahlgrens’ argument neglects this basic proposition of how an
insurance policy works.
The Dahlgrens also assert that the provisions in their
policy extending coverage to real and personal property refer
only to two sets of exclusions, neither of which include ML-
508D. They reason that this means ML-508D does not apply to
real or personal property coverage. At the very least, the
Dahlgrens contend, it isn’t clear that ML-508D applies.
9
This argument ignores that ML-508D is titled “Additional
Exclusions for Unoccupied Residences” (emphasis added) and
is listed on the cover page of the policy with other
endorsements that amend the terms of the contract. It does not
matter that other exclusions also apply to the Dahlgrens’ house
because ML-508D operates in addition to whatever other
exclusions exist. By its terms, ML-508D expressly forecloses
recovery for all loss associated with plumbing accidents,
including damage to real and personal property, unless certain
requirements are met.
Next, the Dahlgrens claim their beach home was “neither
vacant nor unoccupied in any conventional sense” because it
remained furnished with the accessories of daily life.
Dahlgrens Br. 14. In the alternative, they assert the terms
“vacant” and “unoccupied” in ML-508D are ambiguous. Either
way, they explain, ML-508D should not apply to their
situation.
The policy, however, leaves no doubt what “unoccupied”
means. ML-508D explicitly defines “unoccupied” as “an
absence in excess of 72 hours.” We agree with the district court
that this “can only be reasonably read to refer to the absence of
people.” Katopothis, 211 F. Supp. 3d at 15 (emphasis omitted);
see Windsor-Mount Joy Mut. Ins. Co. v. Jones, 2009 WL
3069695, at *6 (Del. Super. Ct. July 17, 2009) (“Considering
the obvious and increased risk insurers have when insured
property is without routine human presence, sporadic or
irregular interaction with the property runs contrary to the
concept of occupancy . . . .”); see also Myers v. Merrimack
Mut. Fire Ins. Co., 788 F.2d 468, 471 (7th Cir. 1986)
(“‘[U]noccupied’ means the lack of habitual presence of human
beings . . . . This construction has been followed by . . .
numerous courts in many other jurisdictions . . . .”);
10
Unoccupied, Webster’s Third New International Dictionary
(2002) (“[N]ot occupied by inhabitants[;] . . . of, relating to, or
being premises on which no one is living although the furniture
and fixtures have not been removed . . . .”). There is no dispute
the Dahlgrens were away from their beach home for over 72
hours, which under the clear terms of the policy means the
flooding occurred while the house was “unoccupied.”
The Dahlgrens did ask a friend to periodically check on the
house and retrieve the mail while they were away, and the
parties dispute whether such neighborliness was enough to
“occupy” the house under the policy. Like the district court, we
need not resolve this question because the good neighbor had
not been to the house in six days when Ms. Dahlgren
discovered the flooding. See Katopothis, 211 F. Supp. 3d at
16 n.9.
In any event, the Dahlgrens urge us to adopt the approach
of the Supreme Court of Delaware and “look to the reasonable
expectations of the insured,” not just when a policy is
ambiguous, but also “if the policy contains a hidden trap or
pitfall, or if the fine print takes away that which has been given
by the large print.” Hallowell v. State Farm Mut. Ins. Co., 443
A.2d 925, 927 (Del. 1982). ML-508D is just such a “hidden
trap” or “fine print,” they argue, and such deception cannot be
allowed to frustrate their reasonable expectation of coverage
for accidental flooding. “It is manifestly unfair to the insureds,”
they assert, “to permit an insurance company to bury a
conflicting Endorsement at the end of the policy, which
purports [to] render express grants of coverage in the policy
illusory.” Dahlgrens Br. 13.
We see nothing hidden or deceptive about ML-508D. It
was written in plain language and listed on the cover page of
the insurance policy as an applicable endorsement. And, to
11
further draw attention to its terms, the endorsement was printed
on blue paper to stand out from the rest of the policy. Windsor-
Mount in no way disguised the endorsement or the conditions
it imposed on coverage.
Nor is there anything surprising about endorsements like
ML-508D. They are designed to prevent extensive damage
from plumbing accidents that might otherwise be avoided with
early detection or simple preventative measures. Cf., e.g.,
Windsor-Mount, 2009 WL 3069695, at *5-6 (“Any reading of
the contract results in the conclusion that the purpose of the
provision in question is to protect the insurance company from
the increased risk that accompanies insuring a house that does
not have an occupant.” (quoting Vushaj v. Farm Bureau Gen.
Ins. Co. of Mich., 773 N.W.2d 758, 760 (Mich. Ct. App.
2009))). An unoccupied house presents a significant risk that
leaking water will go unnoticed for some time, dramatically
increasing the likelihood of extensive damage to property.
What might be only a minor incident in an occupied house
could escalate quickly into major damage if left unchecked,
which is exactly what happened in this case.
The Dahlgrens essentially ask us to “destroy or twist
policy language under the guise of construing it.” O’Brien, 785
A.2d at 288 (quoting Rhone-Poulenc Basic Chems. Co. v. Am.
Motorists Ins. Co., 616 A.2d 1192, 1195 (Del. 1992)). But
“[c]reating an ambiguity where none exists could, in effect,
create a new contract with rights, liabilities and duties to which
the parties had not assented.” Id. (quoting Rhone-Poulenc, 616
A.2d at 1196). That we cannot do.
Finally, the Dahlgrens argue ML-508D is simply
“ineffective” because it was printed below a notice that
Windsor-Mount did not file with the Delaware Insurance
Commissioner. Dahlgrens Br. 34; cf. 18 Del. Code § 2712
12
(requiring insurers to file insurance forms with the Delaware
Insurance Commissioner). The Dahlgrens insist that the
presence of unapproved language on the same page, even
separate from ML-508D, voids the endorsement.
To the extent this argument has any merit, we would still
apply ML-508D in this case because the endorsement is
“unambiguous and not contrary to public policy” so “there is
little basis for invalidating it.” Hercules, Inc. v. AIU Ins. Co.,
784 A.2d 481, 501 (Del. 2001) (footnote and quotation marks
omitted); see 18 Del. Code § 2718(b) (“Any condition,
omission or provision not in compliance with the requirements
of this title and contained in any policy, rider or endorsement
hereafter issued and otherwise valid shall not thereby be
rendered invalid but shall be construed and applied in
accordance with such condition, omission or provision as
would have applied had the same been in full compliance with
this title.”). Indeed, no one disputes that the Delaware
Insurance Commissioner approved ML-508D. And, ironically,
the notice actually draws attention to the endorsement and the
risks of water damage.
While the Dahlgrens suggest yet other reasons why they
should prevail, they forfeited those arguments when they failed
to raise them in the district court. See, e.g., Zevallos v. Obama,
793 F.3d 106, 114 (D.C. Cir. 2015) (“Because these arguments
were not made below, they have been forfeited.”). We
conclude, therefore, that the Dahlgrens cannot recover from
Windsor-Mount under the clear terms of their insurance policy.
B
The Dahlgrens fault the district court further for
concluding it lacked personal jurisdiction over Gale Force and
transferring any related claims to the district court in Delaware.
13
The Dahlgrens introduce this issue in their opening brief with
a section heading that asserts Gale Force has “contacts” with
the District of Columbia, although the Dahlgrens make no
effort to explain what those contacts are. Dahlgrens Br. 34.
They then state in a single, vague, and unsupported sentence
that the district court’s decision to transfer the claims against
Gale Force was “inextricable” from its decision to grant
summary judgement to Windsor-Mount and should be
reversed. Id. The reply brief does not mention personal
jurisdiction at all. Such cursory treatment of the issue is not
adequate to raise it for review. See Fed. R. App. P. 28(a)(8)(A);
N.Y. Rehab. Care Mgmt., LLC v. NLRB, 506 F.3d 1070, 1076
(D.C. Cir. 2007) (“It is not enough merely to mention a possible
argument in the most skeletal way, leaving the court to do
counsel’s work.” (quotation marks omitted)); Ry. Labor
Execs.’ Ass’n v. U.S. R.R. Ret. Bd., 749 F.2d 856, 859 n.6 (D.C.
Cir. 1984) (“We decline to resolve this issue on the basis of
briefing which consisted of only three sentences . . . and no
discussion of the relevant . . . case law.”).
IV
The judgment of the district court is affirmed.
So ordered.