Steele v. Statesman Insurance

OPINION OF THE COURT

LARSEN, Justice.

The issue presented in this appeal is whether the earth movement exclusion in an “all-risk” homeowner’s insurance policy bars coverage for damage (loss) due to natural events only, or natural and man-made events.

Appellants, Charles A. Steele and Patricia M. Steele, own a home located in Scott Township, Allegheny County, Pennsylvania. Appellants purchased an “all-risk” homeowner’s insurance policy from Appellee, Statesman Insurance Company (Statesman) which was in effect at the time of the loss described hereinafter.

On March 13, 1988, the Steeles sustained damage to their home when the hillside in their rear-yard collapsed. At that time the Steeles’ rear-yard neighbor was engaged in construction on their property. The collapse occurred because the rear-yard neighbor overbuilt, overloaded, and overburdened the hillside shared by both properties. The Steeles reported the damage (loss) to Statesman in compliance with the conditions of their homeowner’s insurance policy. Statesman refused coverage due to the following earth movement exclusion:

We do not cover loss resulting directly or indirectly from:

2. Earth Movement. Meaning any loss caused by, resulting from, contributed to or aggravated by earthquake; landslide; mudflow; earth sinking, rising or shifting; volcanic eruption meaning the eruption, explosion or effusion of a volcano; unless direct loss by:

(1) fire;

(2) explosion other than the explosion of a volcano; or

(3) breakage of glass or safety glazing material;

ensues and then we will pay only for the ensuing loss.

This exclusion does not apply to loss by theft.

On May 20, 1988, Appellants filed suit in the Court of Common Pleas of Allegheny County against Statesman for breach of contract. Statesman filed a motion for summary judgment on the basis that the homeowner’s insurance policy specifically excluded from coverage any loss to the property or residence caused by earth movement. The trial court granted Statesman’s motion for summary judgment. The Superior Court affirmed. 407 Pa.Super. 656, 584 A.2d 1055. We reverse.

A motion for summary judgment “shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law ”. Pa.R.C.P. 1035(b) (emphasis added).

Recently, in Bateman v. Motorists Mutual Insurance Co., 527 Pa. 241, 590 A.2d 281, 283 (1991), we set forth the principles governing the interpretation of a contract of insurance:

Review is aimed at ascertaining the intent of the parties as manifested by the language of the written instrument. Where the provision of the policy is ambiguous, the policy provision is construed in favor of the insured and against the insurer, the drafter of the instrument. If the policy language is clear and unambiguous, we give effect to the language of the contract. Standard Venetian Blind Co. v. American Empire Insurance Co., 503 Pa. 300, 469 A.2d 563 (1983).

“A contract is ambiguous if it is reasonably susceptible of different constructions and capable of being understood in more than one sense.” Hutchinson v. Sunbeam Coal Corp., 513 Pa. 192, 200, 519 A.2d 385, 390 (1986).

The earth movement exclusion in the contract of insurance at issue is ambiguous. On one hand, the provision bars coverage for natural events, ie., earthquakes and volcanic eruptions. On the other hand, the provision bars coverage for events which can be natural, man-made or both, ie., landslide, mudflow, earth sinking, rising or shifting. Although it is arguable that the exclusion is applicable to earth movement due to natural and man-made events, a reasonable insured could conclude that the exclusion is applicable to earth movement due to natural events only. Since the earth movement exclusion is reasonably susceptible to different constructions, it is impossible to determine the intent of the parties as manifested by the written language of the contract of insurance.

We are, therefore, required to construe the language of the contract in favor of the insured and against the insurer (the drafter of the instrument). Bateman, supra. Also, the venerable rule of ejusdem generis (of the same kind or class) used in the construction of laws, wills, and other instruments is instructive: “where general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to the persons or things of the same general kind or class as those specifically mentioned”. Black’s Law Dictionary at p. 270 (5th Ed. 1983) citing, Black, Interpretation of Laws 141.

We, therefore, hold that the earth movement exclusion bars coverage for damage (loss) from earth movement due to natural events only. The earth movement exclusion in the “all-risk” insurance policy issued by Statesman to the Steeles does not bar coverage for damage (loss) from the collapse of the hillside due to a man-made event — construction on adjoining property.¹

The order of the Superior Court is reversed.

FLAHERTY, J., files a dissenting opinion joined by NIX, C.J.

1 . Our decision is in accord with other jurisdictions that have interpreted similar earth movement exclusions in contracts of insurance. Peters Township School District v. Hartford Accident and Indemnity Company, 833 F.2d 32 (3d Cir.1987); Wyatt v. Northwestern Mutual Ins. Co., 304 F.Supp. 781 (D.C.Minn.1969). Contra, Stewart v. Preferred Fire Ins. Co., 206 Kan. 247, 477 P.2d 966 (1970); Nida v. State Farm Fire & Cas. Co., 454 So.2d 328 (La.App.1984); Village Inn Apts. v. State Farm Fire & Cas. Co., 790 P.2d 581 (Utah App.1990).