Aetna Casualty v. Greystar Captl Prt

• Court: Court of Appeals for the Fifth Circuit
• Decided: June 22, 2001
• Docket: 00-21000
• Status: Unpublished

Opinion

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 00-21000

Summary Calendar

AETNA CASUALTY & SURETY COMPANY,

Plaintiff-Appellee,

versus

GREYSTAR CAPITAL PARTNERS L.P.; ET AL.,

Defendants,

BROOKHOLLOW VENTURE LTD., doing business as Cinnamon Square Apartments,

Defendant-Appellant.

Appeal from the United States District Court For the Southern District of Texas (H-98-CV-1585)

June 22, 2001

Before HIGGINBOTHAM, WIENER, and BARKSDALE, Circuit Judges.

PER CURIAM:*

Appellant Brookhollow Venture Ltd. appeals from a grant of

summary judgment in favor of appellee Aetna Casualty & Surety Co.

declaring that Aetna has no duty to indemnify Brookhollow for

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. damage to the foundations and interiors of its Cinnamon Square

Apartments. We affirm.

I

Brookhollow owns and Greystar manages the Cinnamon Square

Apartments in Harris County, Texas. Both were insureds under an

all risk policy covering the Cinnamon Square Apartments issued by

Aetna. When Greystar discovered that several units of the

apartments had sunk and their floors were uneven, Brookhollow

investigated and discovered that plumbing leaks had caused the

subsidence of the units’ foundations and damage to the buildings’

interiors. Apparently, an underground pipe leak had caused the

earth beneath some apartment buildings to swell, which in turn

caused shifting of the foundations of the buildings.

Brookhaven sought coverage for the damage under its all risks

policy with Aetna. In response, Aetna sued for a declaratory

judgment of no duty to indemnify. The district court granted

summary judgment to Aetna with respect to the damage to the

foundations and interiors.1 The district court dismissed the

remaining claims, including all of the claims involving Greystar,

pursuant to a settlement. The district thus entered a final

judgment, and Brookhollow appealed.

II

1 The parties had raised several other claims, including claims for plumbing repairs and extra-contractual claims.

2 We review the grant of summary judgment de novo. There are no

material factual disputes. Aetna concedes, for purposes of its

summary judgment motion, that the damage to the apartments was

caused by a pipe leak that caused the ground underneath the

apartments to either swell or subside, which in turn caused the

shifting of the foundations. The dispute is over the

interpretation of the insurance policy, which is a question of law.

Under Texas law, we apply the same rules of construction

governing other contracts.2 We enforce unambiguous text as

written. If, however, the contract is subject to two or more

reasonable interpretations, it is ambiguous, and we must construe

the policy language strictly in favor of the insured.3

In this case, the policy “insures against all risks of direct

physical loss to the insured property from any external cause

except as hereinafter excluded.” The relevant exclusion, called

Exclusion J, excludes “loss caused by or resulting from . . .

settling, cracking, bulging, shrinking or expansion of pavements,

foundations, walls, floors, roofs or ceilings.”

Following Texas law, as we must, we hold that Exclusion J

unambiguously excludes Brookhaven’s loss. Texas courts have

repeatedly held that exclusions virtually identical to Exclusion J

remove coverage for damages from settling or sinking of

2 See Balandran v. Safeco Ins. Co. of America, 972 S.W.2d 738, 740-41 (Tex. 1998). 3 See id. at 741.

3 foundations, even if the settling or sinking is caused by some

external force.4 As one Texas court stated, “The fact that the

settling of the foundation and the cracking of the walls and

foundation were brought about by a water leak is immaterial.”5

Thus, Aetna’s concession that the water leak was the ultimate cause

of the loss is immaterial. Since the settling of the foundation is

the source of the loss, Exclusion J applies, and Aetna has no duty

to indemnify Brookhollow for the damage to its apartments’

foundations and interiors.

III

Brookhollow argues that Exclusion J cannot apply here since

the exclusion of “loss caused by or resulting from . . . settling,

cracking, bulging, shrinking or expansion of pavements,

foundations, walls, floors, roofs or ceilings”6 cannot include loss

to pavements, foundations, walls, etc., because if Aetna had meant

“loss to” rather than “loss caused by or resulting from” it would

have said so. In support of this argument, Brookhollow points to

Limitation 10(C), which states that “pavements . . . are not

covered against loss caused by . . . pressure or weight of ice or

4 See Bentley v. Nat’l Std. Ins. Co., 507 S.W.2d 652, 654-55 (Tex. Civ. App.—Waco 1974); see also Zeidan v. State Farm Fire & Casualty Co., 960 S.W.2d 663 (Tex. App.—El Paso 1997); Lambros v. Std. Fire Ins. Co., 530 S.W.2d 138, 140 (Tex. Civ. App.—San Antonio 1975). 5 General Ins. Co. of America v. Hallmark, 575 S.W.2d 134, 136 (Tex. Civ. App.—Eastland 1979). 6 Emphasis added.

4 water.” Brookhollow argues that this exclusion would be surplusage

if Exclusion J covered loss to pavements, foundations, etc.

We disagree. Brookhollow’s reading of the policy fails to

make sense of the context in which these words appear. Brookhollow

ignores the fact that Exclusion J applies only to losses caused by

or resulting from “settling, cracking, bulging, shrinking or

expansion” of foundations. Thus, our reading of the policy does

not rewrite Exclusion J to exclude all damage to foundations; we

read its plain language to exclude only damages caused by settling,

cracking, and so on. Thus, to use Brookhollow’s examples, damage

to a foundation from a fallen tree or a car crash would not be

damage to the foundation “caused by or resulting from settling,

[etc.].”

By the same logic, Limitation 10(C) is not surplusage. It

adds “pressure or weight of ice or water” to the list of excluded

causes of loss to pavement. Further, Brookhollow takes Limitation

10(C) out of context. In context, it is clear that the limitation

is designed to exclude damage caused by wind, precipitation, or the

surging of surface water against structures near open water.7

IV

7 In its entirety, Limitation 10(C) reads, “Fences, pavements, outdoor swimming pools and related equipment, retaining walls, bulkheads, piers, wharves or docks are not covered against loss caused by freezing or thawing, impact of watercraft, or by pressure or weight of ice or water whether driven by wind or not.”

5 For the foregoing reasons, the judgment of the district court

is AFFIRMED.