Derbyshire Baptist Church v. Church Mut. Ins. Co.

469 F.Supp.3d 535

DERBYSHIRE BAPTIST CHURCH, Plaintiff,

v.CHURCH MUTUAL INSURANCE COMPANY, Defendant.

Civil Action No. 3:19cv731–HEH

United States District Court, E.D. Virginia, Richmond Division.

Signed June 29, 2020

Bruce Edwin Arkema, Durrette Arkema Gerson & Gill PC, Richmond, VA, for Plaintiff.

David Drake Hudgins, Hudgins Law Firm PC, Alexandria, VA, for Defendant.

MEMORANDUM OPINION

(Cross-Motions for Summary Judgment)

Henry E. Hudson, Senior United States District Judge

On June 26, 2019, a large portion of the sanctuary ceiling of the Derbyshire Baptist Church collapsed, causing substantial damage. The Church ("Derbyshire Baptist" or "Plaintiff") filed a timely claim with its insurance carrier, the Defendant Church Mutual Insurance Company ("Church Mutual" or "Defendant"). After reviewing the claim and inspecting the damaged area, Church Mutual denied coverage, contending that the damages are outside the scope of the insurance policy's terms. This declaratory judgment action followed, seeking this Court's construction of the pertinent terms and provisions at issue.

The parties have filed memoranda supporting their respective positions (ECF Nos. 14, 16), and the Court heard oral argument on June 16, 2020. For the reasons stated herein, Plaintiff's Motion for Summary Judgment will be granted in part and denied in part, and Defendant's Motion for Summary Judgment will be granted in part and denied in part.

The material facts are largely undisputed.¹ On June 26, 2019, a portion of the ceiling of Plaintiff's sanctuary failed and fell to the floor. (Joint Stip. ¶ 3, ECF No. 12.) At the time, Plaintiff's premises, including the sanctuary, were covered by a property insurance policy with Defendant (the "Policy," ECF No. 1-2). (Joint Stip. ¶ 8.) As a result, Plaintiff notified Defendant of the ceiling failure, and Defendant engaged a forensics engineer, Johnathan Hatlee ("Hatlee"), to determine the cause of the ceiling's failure. (Id. ¶¶ 7, 9.)

The parties accept the contents of Hatlee's investigative report as agreed material facts ("Hatlee's Report," ECF No. 1-3). (Joint Stip. ¶¶ 10–11.) Hatlee found that the collapse was caused by the disconnection of wire support hangers from the wood roof beams, which increased the load on the adjacent hangers. (Hatlee's Report at 2.) Principally, he concluded that "[t]he redistribution of load on the hangers resulted in a progressive failure of the hangers and their supported components." (Id. ) He determined that the initial failure of the wire support hangers from the wood roof beams was caused by the thermal expansion and contraction of the wood roof beams as the temperature and humidity fluctuated, which allowed the nails attached to the hangers to withdraw from the beams. (Id. )

Following the completion of Hatlee's Report, Defendant denied coverage, notifying Plaintiff in a letter dated July 17, 2019. (Joint Stip. ¶¶ 10, 12.) In so doing, it explained that the causes of Plaintiff's loss or damage were excluded and limited under the Policy. (ECF No. 1-4 at 1–2.) Plaintiff sought reconsideration of the denial of its claim based upon the "Additional Coverage – Collapse" provision in the Policy but was unsuccessful. (Joint Stip. ¶ 14.) Plaintiff claims Defendant failed to respond to Plaintiff's request for reconsideration. (Pl.'s Mem. Supp. Summ. J. [hereinafter Pl.'s Mem.] at 4, ECF No. 16.)

The standard of review of cross-motions for summary judgment is well-settled in the United States Court of Appeals for the Fourth Circuit.

On cross-motions for summary judgment, a district court should rule upon each party's motion separately and determine whether summary judgment is appropriate as to each under the [Federal Rule of Civil Procedure] 56 standard. Summary judgment is appropriate only if the record shows there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.

Norfolk S. Ry. Co. v. City of Alexandria , 608 F.3d 150, 156 (4th Cir. 2010) (alteration in original) (internal quotations and citations omitted). Counsel do not contend that there are facts in dispute, nor does the record reveal any. Rather, the parties' dispute focuses on the interpretation of the term "decay." Because this is a dispositive question of law, the Court finds summary judgment is appropriate. See Sky Angel U.S., LLC v. Discovery Commc'ns, LLC , 885 F.3d 271, 278 (4th Cir. 2018) (applying state law to determine the ambiguity of a contract); Wilson v. Holyfield , 227 Va. 184, 313 S.E.2d 396, 398 (1984) (stating that whether a term is ambiguous is a question of law for the court to decide).

Whether the collapse of the ceiling in Derbyshire Baptist's sanctuary satisfies the requirements for coverage under the provisions of the Policy with Church Mutual requires the Court to delve into the Policy's web of exclusions and limitations. The Policy provides that "[Church Mutual] will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations Page caused by or resulting from any Covered Cause of Loss." (Policy at 85.) "Covered Causes of Loss" are defined as "Risks of Direct Physical Loss," unless the Policy specifically limits or excludes the loss. (Id. at 107.) Although the Policy generally excludes any loss or damage caused or resulting from collapse, the Policy's "Additional Coverage – Collapse" provision provides that collapse caused by "decay that is hidden from view" is covered "unless the presence of such decay is known to an insured prior to collapse."² (Id. at 108–09, 111–12.)

Plaintiff contends that its claim is covered under the Additional Coverage – Collapse provision in the Policy—specifically because, any interpretation of "decay," including a finding that it is ambiguous, obligates Defendant to provide coverage under Virginia law.³ (Pl.'s Mem. at 6–11, 21–22.) This Court agrees.

The parties agree that Virginia law governs this dispute.⁴ Under Virginia law, courts must construe the language of a contract as written; courts cannot make a new contract for the parties different from that plainly intended.

Pilot Life v. Cross-white , 206 Va. 558, 145 S.E.2d 143, 146 (1965). This is particularly so when a contract involves an insurance policy because,

in the absence of constitutional or statutory barriers, the parties thereto are at liberty to make their own agreement. It needs no citation of authority to assert that where there is ambiguity in the terms of an insurance policy, they should be liberally construed in favor of the insured and against the drafter of the policy; but this does not mean that a strained or unjustified construction of the policy is to be adopted, which disregards the plain meaning and intent of the parties.

Quesenberry v. Nichols , 208 Va. 667, 159 S.E.2d 636, 672 (1968). "[A] court must adhere to the terms of a contract of insurance as written, if they are plain and clear and not in violation of law or inconsistent with public policy." Nat'l Hous. Bldg. Corp. v. Acordia of Va. Ins. Agency, Inc. , 267 Va. 247, 591 S.E.2d 88, 90–91 (2004) (quoting Blue Cross & Blue Shield v. Keller , 248 Va. 618, 450 S.E.2d 136, 140 (1994) ). However, "where two constructions are equally possible, or where reasonable persons may reach reasonable, but opposite, conclusions as to whether the word applies to a particular situation, the word is ambiguous." Spence-Parker v. Md. Ins. Grp. , 937 F. Supp. 551, 556 (E.D. Va. 1996) (internal alterations and quotations omitted) (citing St. Paul Fire & Marine Ins. v. S.L. Nusbaum & Co. , 227 Va. 407, 316 S.E.2d 734, 736 (1984) ).

In an insurance contract dispute, Virginia courts place the burden on the policyholder "to bring himself within the policy." TRAVCO Ins. v. Ward , 715 F. Supp. 2d 699, 706 (E.D. Va. 2010) (quoting Md. Cas. Co. v. Cole , 156 Va. 707, 158 S.E. 873, 876 (1931) ). If the policyholder does so, the burden shifts to the insurer to prove that an exclusion applies, as policy exclusions constitute an affirmative defense. Transcon. Ins. v. RBMW, Inc. , 273 Va. 416, 641 S.E.2d 101, 104 (2007).

The term "decay" is not defined in the Policy. (See Pl.'s Mem. at 7; Def.'s Mem. Supp. Summ. J. [hereinafter Def.'s Mem.] at 11, ECF No. 14.) Therefore, it must be given its ordinary meaning. Scottsdale Ins. v. Glick , 240 Va. 283, 397 S.E.2d 105, 108 (1990). However, dictionary definitions of "decay" are both narrow and broad and thus do not settle the issue. Compare Decay , Merriam-Webster's Collegiate Dictionary (10th ed. 1996) ("gradual decline in strength, soundness, or prosperity or in degree of excellence or perfection ... rot; specif : aerobic decomposition of proteins chiefly by bacteria" (internal quotations omitted) (emphasis in original)), with Def.'s Mem. Supp. Summ. J. Ex. B at 2, ECF No. 14-3 ("Of material things: Wasting or wearing away, disintegration; dilapidation, ruinous condition" (quoting Decay , Oxford English Dictionary (Jan. 28, 2020), https://www.oed.com/view/Entry/48067)).

Therefore, the term "decay" is better interpreted—and should be interpreted—by considering the Policy as a whole.⁵ Pocahontas Min. Ltd. Liability Co. v. CNX Gas Co. , 276 Va. 346, 666 S.E.2d 527, 531 (2008). "Decay" first appears in the Policy's provision for exclusions. (See Policy at 109 ("We will not pay for loss or damage caused by or resulting from any of the following: .... Rust, or other corrosion, decay, deterioration, hidden or latent defect, or any quality in the property that causes it to damage or destroy itself.").) The Policy clarifies soon after, however, in the "Additional Coverage – Collapse" provision, that

[Church Mutual] will pay for direct physical loss or damage to Covered Property, caused by collapse of a building or any part of a building that is insured under this Coverage Form or that contains Covered Property insured under this Coverage Form, if the collapse is caused by one or more of the following: .... Decay that is hidden from

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