Cam-Sam Real Estate Holding, LLC, Plaintiff v. Merchants Mutual Insurance Company and Hartford Fire Insurance Company, Defendants Sentinel Insurance Company, Ltd. a/k/a Hartford Fire Insurance Company, Counter Claimant and Third Party Plaintiff v. Cam-Sam Real Estate Holding, LLC, Counter Defendant, and D La Pooch Hotel, LLC, n/k/a D La Pooch Resort, LLC, and Lindsey Todt, Third Party Defendants

2019 DNH 108

Opinion

UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Cam-Sam Real Estate Holding, LLC, Plaintiff Case No. 18-cv-433-SM v. Opinion No. 2019 DNH 108

Merchants Mutual Insurance Company and Hartford Fire Insurance Company, Defendants

Sentinel Insurance Company, Ltd. a/k/a Hartford Fire Insurance Company, Counter Claimant and Third Party Plaintiff

v.

Cam-Sam Real Estate Holding, LLC, Counter Defendant,

and

D La Pooch Hotel, LLC, n/k/a D La Pooch Resort, LLC, and Lindsey Todt, Third Party Defendants

O R D E R

In this insurance coverage dispute, Merchants Mutual

Insurance Company (“Merchants”) seeks summary judgment on Cam-

Sam Real Estate Holding, LLC’s coverage claim. Cam-Sam objects.

For the reasons discussed, Merchant’s summary judgment motion is

granted. Background

Cam-Sam is the owner of a multi-unit commercial building

and property located at 21 Londonderry Turnpike, Hooksett, New

Hampshire. On June 2, 2016, Cam-Sam rented Unit 1 of the

building to D La Pooch Hotel, LLC, (“D La Pooch”) for a term of

five years. D La Pooch operated a pet daycare and grooming

business in the leased premises.

Cam-Sam alleges that D La Pooch caused extensive damage and

contamination of Unit 1 by, inter alia, failing to properly

clean up after the pets, and failing to exercise reasonable care

in its use of the plumbing and water fixtures. Cam-Sam

initiated eviction proceedings, and D La Pooch vacated the unit

in August of 2017. Cam-Sam then discovered the extent of damage

to Unit 1. The space was severely contaminated by pet urine and

feces, and substantial damage had been caused by

spillage/seepage from overflowing toilets. Substantial repairs

were required including: removal of all building materials from

Unit 1 down to the shell; remediation of odor, mold, and

bacteria in the air and duct systems; and shot blasting the

concrete floor to remove embedded odors.

At all relevant times, Cam-Sam was insured under a

commercial general liability policy issued by Merchants Mutual,

(Policy No. CMP9153278 (the “Policy”)), pursuant to which

2 Merchants agreed to “pay for direct physical loss of or damage

to Covered Property at the premises . . . caused by or resulting

from any Covered Cause of Loss.” Document No. 34-3, p. 12.

Cam-Sam filed suit against D La Pooch, and brought this

declaratory judgment action seeking coverage under its policy

with Merchants Mutual. Cam-Sam also filed suit against Sentinel

Insurance Company, Limited (D La Pooch’s insurance provider),

seeking to recover under its insurance. Merchants seeks summary

judgment, contending that its policy does not provide coverage

with respect to the damages described in Cam-Sam’s complaint.

Legal Standard

When ruling on a motion for summary judgment, the court

must “constru[e] the record in the light most favorable to the

nonmoving party and resolv[e] all reasonable inferences in that

party’s favor.” Pierce v. Cotuit Fire Dist., 741 F.3d 295, 301

(1st Cir. 2014). Summary judgment is appropriate when the

record reveals “no genuine dispute as to any material fact and

the movant is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(a). In this context, “[a]n issue is ‘genuine’ if it

can be resolved in favor of either party, and a fact is

‘material’ if it has the potential of affecting the outcome of

the case.” Xiaoyan Tang v. Citizens Bank, N.A., 821 F.3d 206,

215 (1st Cir. 2016) (citations and internal punctuation

3 omitted). Nevertheless, if the non-moving party’s “evidence is

merely colorable, or is not significantly probative,” no genuine

dispute as to a material fact has been proved, and “summary

judgment may be granted.” Anderson v. Liberty Lobby, Inc., 477

U.S. 242, 249–50 (1986) (citations omitted). In other words,

“[a]s to issues on which the party opposing summary judgment

would bear the burden of proof at trial, that party may not

simply rely on the absence of evidence but, rather, must point

to definite and competent evidence showing the existence of a

genuine issue of material fact.” Perez v. Lorraine Enterprises,

Inc., 769 F.3d 23, 29–30 (1st Cir. 2014).

The key, then, to defeating a properly supported motion for

summary judgment is the non-movant’s ability to support his or

her claims concerning disputed material facts with evidence that

conflicts with that proffered by the moving party. See

generally Fed. R. Civ. P. 56(c). It naturally follows that

while a reviewing court must take into account all properly

documented facts, it may ignore a party’s bald assertions,

speculation, and unsupported conclusions. See Serapion v.

Martinez, 119 F.3d 982, 987 (1st Cir. 1997).

4 Discussion

Merchants denied coverage in this case based upon several

Policy exclusions.

1. “Wear and Tear” Exclusion

Merchants first notes that the Policy specifically excludes

coverage for loss or damages “caused by or resulting from”

“[w]ear and tear.” Document No. 34-3, p. 52, Exclusion 2(d)(1).

According to Merchants, such wear and tear includes both the

alleged “residual odor,” Compl. ¶ 14, and damage from water

spillage. Those damages, says Merchants, are exactly the type

of “wear and tear” one would expect from a dog-grooming

operation.

Cam-Sam disagrees, pointing out that Unit 1 was damaged

well beyond what any normal operation would be expected to

occasion. The Unit was contaminated to the degree that only

gutting and rebuilding could mitigate the damage. “Wear and

tear,” says Cam-Sam, refers to expected and anticipated routine

maintenance, like cleaning carpets and repainting walls, not a

complete structural rehabilitation of the premises. Merchants

responds that Cam-Sam’s position improperly limits the wear and

tear exclusion to “normal” wear and tear, adding words that do

not appear in the Policy.

5 The Policy does not define the phrase “wear and tear.”

“Where disputed terms are not defined in the policy, the court

construes them ‘in context, and in the light of what a more than

casual reading of the policy would reveal to an ordinarily

intelligent insured.’” Catholic Med. Ctr. v. Fireman's Fund

Ins. Co., No. 14-CV-180-JL, 2015 WL 3463417, at *3 (D.N.H. June

1, 2015) (quoting Great Am. Dining v. Philadelphia Indem. Ins.

Co., 164 N.H. 612, 625 (2013)). The Court of Appeals for the

First Circuit construed the phrase “wear and tear” in Moran

Towing Corp. v. M. A. Gammino Const. Co., 363 F.2d 108, 114 (1st

Cir. 1966), as follows:

Wear and tear means normal depreciation. No doubt what is ‘normal’ must be responsive to practices in the service for which the vessel is intended. . . . The effects of negligence are not wear and tear, and they do not become wear and tear merely because they may be anticipated.

(internal citations omitted). See also Black’s Law Dictionary

(10th ed. 2014) (defining “wear and tear” as “[d]eterioration

caused by ordinary use; the depreciation of property resulting

from its reasonable use”).

Merchants is correct that some odor permeation and water

damage might be expected when leasing premises to a pet grooming

service. But, as Cam-Sam points out, that Unit 1 required

6 complete gutting and rebuilding suggests a different degree of

loss. Such facts suggest the property damage cannot be fairly

characterized as the result of “ordinary” use: “wear and tear”

simply does not mean “total destruction.” However, the record

as it stands is not sufficiently developed to determine what, if

any, subset of the alleged damages is properly attributable to

“wear and tear,” or ordinary use. Accordingly, summary judgment

based on the “wear and tear” exclusion is not appropriate.

2. Animal Waste Exclusion

Merchants next argues that the Policy’s exclusion for loss

or damages resulting from or caused by “nesting or infestation,

or discharge or release of waste products or secretions by

insects, birds, rodents or other animals” (the “Animal Waste

exclusion”) applies, and bars coverage. Document No. 34-3, p.

52, Exclusion 2(d)(5). Merchants says that dog urine and feces

“unquestionably” fall within the definition of “waste products

or secretions by . . . other animals,” given the obvious facts

that dogs are animals, and urine and feces are animal waste

products. Merchant’s Mem. in Support of Summary Judgment at p.

6.

Cam-Sam takes the position that Merchants reads the

Policy’s exclusion too broadly, and in a manner inconsistent

with the Policy’s purpose. The Policy is intended, Cam-Sam

7 argues, to provide coverage for damage done to property that is

not within the landlord’s control, including, without

limitation, damage done by tenants. Consistent with that

purpose, Cam-Sam contends, the Animal Waste exclusion applies

only when damages are caused by pest or wildlife infestations,

not domestic animals, and not animal related damage brought

about by human negligence and failure to manage animals under

human control and care. Here, Cam-Sam says, the damage was

plainly not caused by pests infesting the property, rodents

leaving droppings, or insects destroying building materials, all

of which would fall within the exclusion. Instead, the damage

was caused by D La Pooch’s employees’ negligent operation of the

business: “Dog feces merely happened to be involved in those

business operations.” Cam-Sam Obj. to Merchant’s Mot. for

Summary Judgment at p. 6. At the least, Cam-Sam contends, the

Animal Waste exclusion is ambiguous, and ought to be construed

in the insured’s favor to provide coverage.

“The fact that the parties may disagree on the

interpretation of a term or clause in an insurance policy does

not necessarily create an ambiguity.” Russell v. NGM Ins. Co.,

170 N.H. 424, 429 (2017) (quoting Bartlett v. Commerce Ins. Co.,

167 N.H. 521, 531 (2015)). “For an ambiguity to exist, the

disagreement must be reasonable.” Id. Given the clear language

8 of the Policy, Cam-Sam’s argument is unpersuasive, as no

ambiguity exists.

Cam-Sam’s complaint asserts that “building materials

comprising D La Pooch’s leased premises were contaminated with

dog urine and feces.” Comp. ¶ 14(b). The resulting odor

necessitated shot blasting the concrete floor, and remediating

odor and bacteria in the air and duct system. So, Cam-Sam has

alleged that the leased premises were, at least in part, damaged

by dog waste and secretions. The source of the waste and

secretions at issue was “other animals.” The Policy language

provides, categorically, that damages resulting from animal

waste and secretions are excluded from coverage. Dogs are

animals. Given the Policy’s broadly worded exclusion, Cam-Sam

could not have reasonably understood the Policy to insure

against damages to the premises resulting from dog urine and

feces. See Santos v. Metro. Prop. & Cas. Ins. Co., 201 A.3d

1243, 1247 (N.H. 2019) (“when the policy language is clear, this

court will not perform amazing feats of linguistic gymnastics to

find a purported ambiguity simply to construe the policy against

the insurer and create coverage where it is clear that none was

intended.”) (citing Russell, 170 N.H. at 429)).

Cam-Sam’s argument that the animal waste was not the direct

and immediate cause of the damages (but rather the damage was

9 caused by negligent D La Pooch employees) does not alter the

analysis. The Policy unambiguously provides that Merchants

“will not pay for loss or damage caused directly or indirectly

by any of the following. Such loss or damage is excluded

regardless of any other cause or event that contributes

concurrently or in any sequence to the loss.” Document No. 34-

3, p. 50 (emphasis added). So, to the extent the damage alleged

by Cam-Sam was caused, even indirectly, by dog “discharge or

release of waste products or secretions,” that damage is not

covered by the Policy.

In sum, property damage caused by or that resulted from

animal waste and secretions are excluded from coverage under the

Policy’s terms. However, as Cam-Sam points out, even if the

animal waste exclusion does apply, it has alleged other causes

of damage besides animal waste, specifically: water damage,

mold, and bacteria. Therefore, the court’s determination

concerning the applicability of the Animal Waste exclusion does

not fully resolve the dispute.

3. Water Damage

Merchants takes the position that any damages caused by

water are also excluded from coverage. The Policy provides some

coverage for water damage. See Document No. 34-4, p. 58.

“Water damage” is defined by the Policy, in relevant part, as:

10 Accidental discharge or leakage of water or steam as a direct result of the breaking apart or cracking of a plumbing, heating, air conditioning or other system or appliance . . . that is located on the described premises and contains water or steam.

Id., at p. 59. Merchants argues that, as pled, Cam-Sam’s

damages do not fall within that definition, because Cam-Sam has

not alleged that its damages were caused by the “accidental”

discharge or leakage of broken plumbing or other water-

containing systems.

The court agrees. Cam-Sam alleges, essentially, that water

damage was caused by D La Pooch’s “failure to properly contain

or manage its water use,” including misuse of the toilet system,

resulting in blockages and overflows that were then not properly

managed, and failure to exercise proper care in dog bathing

operations. Those damages fall outside the Policy’s definition

of “water damage,” and are not covered by the Policy. While

water damage resulting from overflowing toilets might present a

closer call, those damages fall outside the Policy’s coverage as

well.

The New Hampshire Supreme Court has defined the term

“accident” for insurance policy purposes as “an undesigned

contingency, a happening by chance, something out of the usual

course of things, unusual, fortuitous, not anticipated, and not

11 naturally to be expected.” EnergyNorth Natural Gas v. Cont'l

Ins. Co., 146 N.H. 156, 160 (quoting Vermont Mut. Ins. Co. v.

Malcolm, 128 N.H. 521, 523 (1986)). The New Hampshire Supreme

Court has also construed “accident” as “circumstances, not

necessarily a sudden and identifiable event, that were

unexpected or unintended from the standpoint of the insured.”

High Country Assocs. v. N.H. Ins. Co., 139 N.H. 39, 44 (1994)).

Nothing in the record definitively establishes the cause of

the alleged overflowing toilets. Cam-Sam posits that the

overflowing toilets were caused by D La Pooch employees

disposing of dog feces in the toilets. See Document No. 44-2, ¶

10. That means of disposal allegedly clogged the toilets,

causing them to overflow. Whether D La Pooch’s disposal methods

can be properly characterized as an “accident” is questionable,

but neither party directly addresses the issue. However, to the

extent overflowing toilets was caused by improper or negligent

flushing of animal waste, as discussed above, damages resulting

directly or indirectly from animal waste are excluded from

coverage. For that reason, water damage from overflowing

toilets as alleged in the complaint is excluded from coverage.

For similar reasons, Cam-Sam cannot rely on the Policy’s

coverage for damage related to Fungus, Wet or Dry Rot, or

Bacteria. The Policy covers such damages only when in turn

12 caused by a “specific cause of loss,” or a flood. While “water

damage” is explicitly included as a “specified cause of loss,”

as described, the “water damage” alleged by Cam-Sam does not

fall within the Policy’s definition.

Conclusion

For the foregoing reasons, and for those given in

defendant’s memorandum in support of its motion, Merchant’s

motion for summary judgment (document no. 34) is GRANTED.

SO ORDERED.

____________________________ Steven J. McAuliffe United States District Judge

July 8, 2019

cc: David W. Rayment, Esq. Jeffrey Christensen, Esq. Doreen F. Connor, Esq. Michele Carlucci Sears, Esq. Laura Nicole Carlier, Esq. Richard E. Heifetz, Esq.