United States District Court, E.D. Virginia, Alexandria Division
MEMORANDUM OPINION AND ORDER
Bruce Lee Uniied States District Judge
MATTER is before the Court on Plaintiff Taja Investments LLC
and Taja Construction & Rehab, Inc. ("Plaintiff'
or "Taja") and Defendant Peerless Insurance Co.,
a/k/a Liberty Mutual Insurance Co.'s
("Defendant" or "Peerless") Cross-Motions
for Summary Judgment under Federal Rule of Civil Procedure
56. (Doc. 33; Doc. 31). This case concerns Plaintiffs
insurance coverage for the collapse of a wall at a
Washington, DC residential property where Defendant was
conducting renovations. The issue before the Court is whether
either of the two exclusions identified by Peerless in the
insurance policy, the workmanship exclusion
("Workmanship exclusion") or the earth movement
exclusion ("Earth Movement exclusion"), exsclulde
Plaintiffs claim for the building's east wall collapse.
The Court grants Defendant's Motion for Summary Judgment
and denies Plaintiffs Motion for Summary Judgment for two
reasons. First, the Workmanship exclusion precludes coverage
because Plaintiffs acts, errors, and omissions related to the
excavation of the basement coupled with the failure to
install underpinning to secure the building's foundation
caused the east wall's collapse. Furthermore, the ensuing
loss exception fails to restore coverage because no
independent and covered peril contributed to the collapse
other than Plaintiffs excluded conduct. Second, the Earth
Movement exclusion is also precludes Plaintiffs coverage
claim because although Plaintiffs relevant conduct occurred
below grade, it still involved movement of soil and clay at
the earth's surface. Accordingly, Defendant's Motion
for Summary Judgment (Doc. 33) is GRANTED and Plaintiffs'
Motion for Summary Judgment (Doc. 31) is DENIED because both
the workmanship exclusion and the earth movement exclusion of
the insurance policy entitle Defendant to withhold coverage
and deny Plaintiffs claim.
material facts in this case are not in dispute. Plaintiff
Taja is a construction company organized under the laws of
Maryland with its principal place of business in Maryland,
and Defendant Peerless is an insurance company organized
under the laws of New Hampshire and maintains its principal
place of business in New Hampshire. (Compl. at ¶¶
1-2). The insurance policy ("the Policy") is an
"all risk" policy which covers all risk of loss
except those expressly excluded under the Policy's terms.
(Compl. at ¶ 8; Doc. 36-1, at 73). The insured property
at issue is a row house on New York Avenue in Northwest
Washington, DC. Taja began renovating the property's
four-to-five foot basement as part of a restoration plan,
which involved excavating the existing crawl space in order
to create a depth of nine feet to allow living areas to be
created. (Doc. 34, at 1-2). The project's structural
plans reveal that Taja was to excavate the basement in
discrete stages, underpinning the structure at every step to
prevent risk of collapse. (Doc. 40, at 3-4).
principal Michael Watson received cautionary warnings about
the importance of underpinning from project engineer Dennis
Anibaba as far as three weeks prior to the incident. (Doc.
36-3, at 21:3-27:20). Approximately two days before the
incident, Brian Brown, the owner of NextGen Construction that
had renovated the building next door, raised his concern with
Watson about the lack of underpinning. He informed Watson
that he was "concerned about the stability of [the]
below grade soil . . . [the] subcontractor is not doing what
he should be doing." (Id. at 10:6-13:6; Doc.
36-5, at 6:14-9:9). Owen Wilson, owner of the excavation
contractor, confirmed that the traditional method is to do a
"little bit of digging and [then] do your underpinning,
" and inserted a special clause in the contract with
Taja to refuse responsibility for any collapse due to lack of
underpinning. (Doc. 36-6, at 19:20-21:14).
10, 2014, the east wall of the building collapsed. (Compl. at
¶ 7). At the time of the wall's collapse, Watson
confirmed that no underpinning had been performed. (Doc.
36-4, at 81:9-82:25). Taja paid $142, 275 for the immediate
shoring and bracing of the damages following the collapse,
and repairs to place the building back into pre-collapse
condition are $407, 885.89, not including any costs for
excavation or installation of a foundation. (Doc. 34, at 3).
Taja made an insurance claim on Peerless, and Peerless
visited the site on June 20, 2014 for inspection. (Doc. 34,
at 3-4). Peerless hired engineer Mr. Zachary Kates of
Thornton Tomasetti, who determined that the contractor should
not have excavated the entire basement without performing
underpinning, and that as a result the soil and clay below
the east wall became unstable and contributed to the collapse
of the east wall. (Doc. 34, at 4).
February 2015, eight months after the collapse and
Peerless' site inspection, Peerless stated it would not
cover Taja's sustained losses, citing that both the
Workmanship exclusion and the Earth Movement exclusion
entitled them to withhold coverage. (Doc. 34, at 8; Doc.
34-6, at 1 -2). The Workmanship exclusion states that
"defects, errors, and omissions relating to design,
specifications, construction, or workmanship are not covered,
but if loss by another covered peril results, Peerless will
pay for the resulting loss." (Doc. 34-1, at 75-76). The
Earth Movement exclusion states that Peerless "will not
pay for loss caused by any earth movement (other than
sinkhole collapse), " and defines the term as
encompassing "any movement or vibration of the
Earth's surface including but not limited to earthquake,
landslide, mudflow, mudslide, mine subsidence, or sinking,
rising, or shifting of the Earth." (Id. at 73).
Peerless refused to cover Taja's losses, Taja filed suit
in the Circuit Court of Fairfax County on August 28th, 2015,
alleging one count of breach of policy of insurance. (Compl.
at ¶ 1). Taja maintains that it is entitled to damages
approximating $400, 000, plus interest from the date of loss
until the time of judgment at the legal rate, with other
associated relief costs that the Court may seem fit.
(Id. at 4). Peerless subsequently filed for removal
to this Court pursuant to 28 U.S.C. §§ 1441 and
1446. (Id. at ¶ 1). This case is properly
before the Court pursuant to the diversity jurisdiction
requirements set out in 28 U.S.C. § 1332. Taja and
Peerless subsequently filed cross-motions for summary
judgment on May 27, 2016. (Doc. 31; Doc. 33).
Standard of Review
Federal Rule of Civil Procedure 56, the Court must grant
summary judgment if the moving party demonstrates 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.
Fed.R.Civ.P. 56(c) (2013).
reviewing a motion for summary judgment, the Court views the
facts in a light most favorable to the nonmoving party.
Boitnott v. Coming, Inc., 669 F.3d 172, 175 (4th
Cir. 2012) (citing Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 255 (1986)). Once a motion for summary judgment
is properly made and supported, the opposing party has the
burden of showing that a genuine dispute exists.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586-87 (1986); Bouchat v. Baltimore Ravens
Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003).
"[T]he mere existence of some alleged factual dispute
between the parties will not defeat an otherwise properly
supported motion for summary judgment; the requirement is
that there be no genuine issue of material fact."
Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008)
(quoting Anderson, 477 U.S. at 247-48).
"material fact" is a fact that might affect the
outcome of a party's case. Anderson, 477 U.S. at
248; JKC Holding Co. v. Wash. Sports Ventures, Inc.,
264 F.3d 459, 465 (4th Cir. 2001). Whether a fact is
considered to be "material" is determined by the
substantive law, and "[o]nly disputes over facts that
might affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment."
Anderson, 477U.S. at 248; Hooven-Lewis v.
Caldera, 249 F.3d 259, 265 (4th Cir. 2001).
"genuine" issue concerning a "material"
fact arises when the evidence is sufficient to allow a
reasonable jury to return a verdict in the nonmoving
party's favor. Resource Bankshares Corp. v. St. Paul
Mercury Ins. Co.,407 F.3d 631, 635 (4th Cir. 2005)
(quoting Anderson, 477 U.S. at 248). Rule 56(e)
requires the nonmoving party to go beyond the pleadings and
by its own affidavits, or by the depositions, answers to
interrogatories, and admissions on file, designate specific
facts showing that there is a genuine issue for trial.
Celotex Corp. v. Catrett,477 U.S. 317, 324 (1986).
B. Analysis The Court grants Defendant's Motion for
Summary Judgment and denies Plaintiffs Motion for Summary
Judgment for two reasons. First, the Workmanship exclusion is
applicable because the Court readily finds that Plaintiffs
own acts, errors, and omissions related to the
over-excavation of the basement coupled with the failure to
install necessary underpinning to secure the building's
foundation caused the east wall's collapse. The Court
further holds that the ensuing loss exception fails to
restore coverage because no other independent or interceding
covered peril contributed to the collapse other than
Plaintiffs excluded conduct. Second, the Earth Movement
exception is also applicable because although all of
Plaintiffs relevant conduct involved "below ...